Report and Recommendation of the President to the Board of Directors
Project Number: 42399-01 June 2009
Proposed Loan and Asian Development Fund Grant Kyrgyz Republic: CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project 2
CURRENCY EQUIVALENTS (as of 11 May 2009)
Currency Unit – som (Som)
Som1.00 = $0.023 $1.00 = Som43.0999
ABBREVIATIONS
ADB – Asian Development Bank ADF – Asian Development Fund CAREC – Central Asia Regional Economic Cooperation EA – executing agency EIRR – economic internal rate of return EMP – environmental management plan ICB – international competitive bidding IEE – initial environmental examination IPID – Investment Projects Implementation Department KHM – Kyrgyz Agency on Hydrometeorology MOES – Ministry of Emergency Situations MOTC – Ministry of Transport and Communications NPV – net present value PIU – project implementation unit PPMS – project performance management system PRC – People’s Republic of China QBS – quality-based selection QCBS – quality- and cost-based selection ROW – right-of-way RSDS – Road Sector Development Strategy SAEPF – State Agency for Environmental Protection and Forestry SSS – single source selection TA – technical assistance
NOTE
In this report, "$" refers to US dollars
Vice-President X. Zhao, Operations 1 Director General J. Miranda, Central and West Asia Department (CWRD) Director H. Wang, Transport and Communications Division, CWRD
Team leader P. Seneviratne, Principal Transport Specialist, CWRD Team members L. Blanchetti-Revelli, Senior Social Development Specialist (Resettlement), CWRD H. Chen, Counsel, Office of the General Counsel R. Ishenaliev, Transport Specialist, CWRD M. Kunzer, Environment Specialist, CWRD
In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
CONTENTS
Page
LOAN AND GRANT AND PROJECT SUMMARY i MAP I. THE PROPOSAL 1 II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1 A. Performance Indicators and Analysis 1 B. Analysis of Key Problems and Opportunities 2 III. THE PROPOSED PROJECT 5 A. Impact and Outcome 5 B. Outputs 5 C. Special Features 6 D. Project Investment Plan 6 E. Financing Plan 7 F. Implementation Arrangements 8 G. Stakeholder Consultation 11 IV. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS 12 A. Economic Benefits 12 B. Social and Poverty Impacts 12 C. Social Safeguards 13 D. Environmental Impacts 13 E. Project Assumptions and Risks 13 V. ASSURANCES 14 VI. RECOMMENDATION 16
APPENDIXES 1. Design and Monitoring Framework 17 2. Road Subsector Analysis 19 3. External Assistance to the Road Subsector 23 4. Detailed Cost Estimates 24 5. Project Implementation Schedule 26 6. Procurement Plan 27 7. Traffic Forecast and Economic Analysis 32 8. Summary Poverty Reduction and Social Strategy 38 9. Summary Initial Environmental Examination 41
SUPPLEMENTARY APPENDIXES (available on request) A. Project Administration Memorandum B. Financial Management Assessment
LOAN AND GRANT AND PROJECT SUMMARY
Beneficiary Kyrgyz Republic
Classification Targeting classification: Targeted intervention – geographic Sector (subsector): Transport, and information and communication technology (road transport) Themes (subthemes): Regional cooperation (cross-border infrastructure), economic growth (widening access to markets and economic opportunities), capacity development (institutional development) Location impact: Subregional (high) and rural (high)
Environment Category B Assessment An initial environmental examination (IEE) was carried out and the summary of its findings is in Appendix 9.
Social Safeguard Involuntary resettlement: Category C – limited or no impact Assessment Indigenous people: Category C – limited or no impact A summary poverty reduction and social strategy is in Appendix 8.
Project Description The Central Asia Regional Economic Cooperation (CAREC) Program has several road corridors. The CAREC Transport Corridor 1 (Bishkek–Torugart road) is an important regional route linking the People's Republic of China (PRC) to Central Asia and Europe. The road will be improved under individual investment projects. Project 1 was approved in 2008 to rehabilitate 39 kilometers (km) of the road. This submission is for Project 2 (the Project). The Project has two components—a physical and a nonphysical one. The physical component will rehabilitate 75 km and construct a facility to manage cross-border passenger and freight movements to and from the PRC. The cross-border facility covers customs, immigration, health and quarantine, security, and other functions. It will be located close to km 479 (about 60 km inland from the border crossing at Torugart).
The nonphysical component will help with training and will cater for the transport sector master plan. It includes an industry-university program to improve the transport project management skills of engineering graduates. The program includes (i) up to five summer internships at the Ministry of Transport and Communications (MOTC) for students seeking a career in transport, and (ii) at least two short courses in transport engineering and project management.
Rationale The Project will facilitate trade and improve national and regional connectivity. More than 70% of the Kyrgyz Republic’s trade is regional— with Kazakhstan, the Russian Federation, and PRC—and 50% moves by road. However, the corridor is in poor condition and vehicles can travel at only an estimated average speed of 50 km per hour, and are frequently interrupted by snow and rain. Rehabilitating the road will increase speed and reliability of passenger and freight flows and create business opportunities in the adjacent area, one of the poorest parts of the country. The investment will also cut transport costs. ii
Impact and Outcome The Project’s primary impact will be increased regional trade, particularly between the Kyrgyz Republic and the PRC, which will lead to less poverty in Naryn oblast (province). Its main outcomes will be higher accessibility and mobility.
Project Investment The investment cost of the Project is estimated at $62.5 million, Plan including taxes and duties of $6 million.
Amount Item ($ million) Civil works 42.5 Consulting Services 3.0 Duties and Taxes 6.0 Contingencies 10.0 Finance Charges 1.0 Total 62.5 Source: Asian Development Bank estimates.
Financing Plan Amount Source % ($ million) Asian Development Bank Grant 22.0 35.0 Asian Development Bank Loan 28.0 45.0 Government 12.5 20.0 Total 62.5 100.0 Source: Asian Development Bank estimates.
ADB will provide a grant not exceeding $22.0 million and a loan of $28 million equivalent (Special Drawing Rights 18,492,000) from its Special Funds resources to finance the Project. The proposed grant and loan will finance 80% of the cost. The Government will provide counterpart financing of $12.5 million to cover taxes and duties, part of the civil works for border infrastructure development.
Period of Utilization Until 30 June 2014
Estimated 31 December 2013 Completion Date
Executing Agency Ministry of Transport and Communications (MOTC)
Implementation The project implementation unit (PIU) established within MOTC, which Arrangements is managing Project 1, will oversee and manage the second Project. MOTC will strengthen the PIU’s current team of 10 professionals within the next 2 years. Many team members are knowledgeable in international best practices and ADB polices and procedures. They will be responsible for managing the procurement of goods, works, and services; administering contracts; and project arrangements. No major social and environmental impacts have resulted from past road projects. However, as the road network expands and traffic increases, better planning, designing, and monitoring will be needed to manage impacts during and after construction. MOTC will recruit relevant iii
safeguard specialists to the PIU. Action plans will be prepared in these areas, executed during the Investment Program period (i.e. through a series of projects in support of the corridor). These actions will deliver safeguard and gender mainstreaming content.
ADB has assigned a team (combining staff from headquarters and the Kyrgyz Resident Mission) to manage this and other ongoing road sector activities in the Kyrgyz Republic. This team will work with the PIU and review portfolio performance while guiding MOTC on project, policy, maintenance and administration matters. ADB and MOTC have prepared a project administration memorandum (Supplementary Appendix A) to ensure the project is delivered on time and on budget. It outlines the tasks to be performed by each party to maintain the execution schedule, ensure compliance with social and environmental safeguards, ensure transparency and integrity, and report accurately and on time. Additionally, MOTC will use web-based project management to allow better communication between the field offices and the PIU. This will allow ADB to access information on completed physical quantities, disbursements, outstanding payments, contractors’ claims, etc.
Procurement MOTC will procure works and goods financed by ADB according to ADB’s Procurement Guidelines. Civil works are packaged into two contracts and will be procured through international competitive bidding. The cross-border facility, in the vicinity of km 479, will be included in one civil work contract. The procurement activities in the 18 months beginning in May 2009 are in Appendix 6.
Consulting Services Supervising civil works and, if necessary, reviewing and designing other parts of the Bishkek–Torugart road will be done by an international firm. This firm will be selected by MOTC according to ADB’s Guidelines on the Use of Consultants. The selected firm will train on road construction and maintenance. The firm will be selected on the basis of full technical proposals evaluated using the quality- and cost-based selection or quality-based selection method, or single source selection method, if appropriate justification can be provided.
A private firm will be engaged to perform a financial audit. It will be selected using the consultant’s qualification selection method, or the least cost selection method. Services of national and international individual consultants or international firms will be used from time to time to assist PIU staff in special circumstances, or to handle complex issues, including the master plan. The individuals will be selected according to individual consultant recruitment method, and firms will be selected using the quality- and cost-based selection, quality, consultant’s qualification method, or the least cost selection method, after discussing and agreeing with ADB on the terms of reference and budget.
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Project Benefits and The Project will benefit road users in the form of lower operating costs Beneficiaries and travel time. The road will increase economic activity (tourism, agriculture, and mineral resources development). About 1.5 million tons of Kyrgyz Republic–PRC trade in 2015 is expected to move through the Bishkek–Torugart road.
The estimated economic internal rate of return of the direct benefits of improving the Bishkek–Torugart road is 14.4% and the net present value is $49.7 million. The road passes through three oblasts that have poverty levels above the national average of 46%. It will give better market access to the estimated 2.3 million people living in the corridor. About 51% of the project impact area population is female, and will benefit from the improved access to markets for their home grown produce and handicraft.
Risks and There is a risk that the Project will be implemented late and over budget. Assumptions There is also a risk that maintenance will be substandard and underfunded. Counterpart finance is always a concern, aggravated by the current global financial crisis. Project execution delays will cut the rate of return in achieving the expected results.
ADB is aware of these risks and is working closely with the Government on improving capabilities, maintenance financing and institutional effectiveness. The resident mission and the headquarters teams will join up with the MOTC team to ensure that execution schedules are kept in touch and that adequate budget allocation are made every year. The latter will be covenanted in the loan agreement.
ADB's dialogue with the Government is effective and constructive. The Government agrees with the risk assumptions and implementation proposals. It has also tapped other financiers to complete another 150 km by 2015.
I. THE PROPOSAL
1. I submit for your approval the following report and recommendation on (i) a proposed loan, and (ii) a proposed grant, both to the Kyrgyz Republic for the CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project 2 (the Project). The design and monitoring framework for the Project is in Appendix 1.
II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES
A. Performance Indicators and Analysis
2. Growth in the Kyrgyz Republic’s trade has been bolstered by improvements in the transport system, especially roads. The dominance of the road sector is evident from the modal split trends in freight and passenger traffic shown in Table 1. Over 90% of the passengers and more than 50% of the freight in the Kyrgyz Republic move by road. Railways carry increasing amounts of bulk commodities and machinery, but the 320 kilometers (km) of single track within the country exist only in the form of several spurs from two branches—one from Kazakhstan railways (in the north) and the other from Uzbekistan railways (in the southeast). Air transport has been serving a varying share of the demand—mostly international passengers and freight— but carries less than 5% of the total traffic. Domestic air services are mainly between Bishkek and Osh. Water transport is limited to few operations in Lake Issyk-Kul (map).
Table 1: National Freight and Passenger Traffic Flows Transport Mode 2002 2004 2006 2008 Freight (million ton-kilometers) Rail 394.6 714.9 752.0 943.1 Road 875.1 847.4 864.0 1059.9 Air 38.8 45.5 34.2 58.6 Total 1,308.5 1,607.8 1,650.2 2061.6 Passenger (million passenger-kilometers) Rail 43.1 45.3 61.5 89.6 Road 4,857.3 5,407.3 5,936.4 6509.0 Air 341.9 458.9 360.2 632.7 Total 5,242.3 5,911.5 6,358.1 7231.3 Source: Ministry of Transport and Communications of the Kyrgyz Republic.
3. The Kyrgyz Republic’s road-based trade with the People’s Republic of China (PRC) through Torugart, which amounts to about half its total trade with the PRC, rose from about 100,000 tons in 2003 to more than 280,000 tons in 2007 (Table 2). This increase was driven mostly by the rise in demand for consumer goods in the Kyrgyz Republic, and export of metals to the PRC. This has caused the number of vehicles crossing the border to more than double in 4 years.
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Table 2: Freight and Passenger Traffic Flow through Torugart Border Item 2003 2004 2005 2006 2007 Number of Vehicles Kyrgyz Republic 4,040 7,598 7,110 7,662 8,214 PRC 292 660 983 1,149 1,396 Total 4,332 8,258 8,093 8,811 9,610 ADT 24 45 44 48 52 change (%) (16) 91 (2) 9 8 Volume of Freight (tons) To PRC 77,677 171,51 147,327 158,765 170,203 From PRC 26,351 53,923 79,401 92,810 112,761 ( ) = negative, ADT = average daily traffic, PRC = People’s Republic of China. Source: National Statistics Committee. 2008. Kyrgyzstan in Figures. Bishkek.
4. The 35,000 km road network in the Kyrgyz Republic spans evenly across the seven oblasts (provinces), and connects many of the remote communities to each other and to neighboring countries. The Ministry of Transport and Communications (MOTC) manages about 19,000 km of the roads (republican roads) that are under the jurisdiction of the central Government. These roads are classified international (22%), national (30%), and rural (48%) roads. The remaining 16,000 km are mainly rural roads under the jurisdiction of local governments. About 40% (7,500 km) of the republican roads are paved, 50% are gravel, and the others are unpaved roads. Development partners have provided more than $400 million (on average about $30 million per year) for road improvement, and this helped rehabilitate nearly 1,600 km of roads (40% of international roads) between 1995 and 2008. Works on another 660 km are either continuing or expected to start before the end of 2010. However, a road condition survey conducted in 2005 revealed that more than 70% of the local roads also need repair or reconstruction. More than 50% of the international roads, including parts of the Bishkek–Torugart road, have yet to be rehabilitated.
B. Analysis of Key Problems and Opportunities
1. Problems
5. Lack of Funds. All development partners recognize that, unless these roads are improved, the network is unlikely to be able to serve the increased demand for transport generated by growing regional trade. Moreover, border infrastructure and procedures need to be improved to serve the share of international and transit traffic, particularly vehicles carrying natural resources, between the PRC and neighboring countries. These two types of traffic would increase substantially because of the limited potential to improve the railways across mountainous terrain. The Government has prepared a Road Sector Development Strategy for 2007–20101 (RSDS) that specifies eight medium-term measures to improve access to regional and local markets: (i) rehabilitation and adequate maintenance, (ii) transport independence, (iii) improvement of the road financing system, (iv) involvement of the private sector in road construction and maintenance, (v) involvement of local communities in maintenance of local roads, (vi) institutional reforms, (vii) improvement of road safety, and (viii) use of modern technologies in road management and monitoring. Eight roads, including the Bishkek–Torugart road, are identified in the strategy for improvement on a priority basis. The target is to
1 Ministry of Transport and Communications of the Kyrgyz Republic. 2007. Road Sector Development Strategy for 2007–2010. Bishkek.
3 rehabilitate or reconstruct at least one-third of these roads by 2010. A detailed analysis of the road subsector in the Kyrgyz Republic is in Appendix 2.
6. The total estimated cost of fully implementing the physical components of the RSDS is $1.5 billion. This includes about $1.2 billion for rehabilitating some 2,000 km and maintaining all roads under MOTC’s jurisdiction during the next 5 years. The first phase of the RSDS requires (i) about $490 million for rehabilitating the remaining sections of the Bishkek–Torugart road and Osh–Isfana road, and (ii) about $48 million annually for maintenance. The Government expects to borrow or receive grants from its development partners for this, and to finance maintenance through allocations from the central budget. In the past, it allocated progressively more funds for the road sector—total funding increased from $12 million in 2005 to $40 million in 2007. However, the Government has difficulty financing the total cost of the RSDS from its budget.
7. Organizations and Regulations. Since 2001, the Asian Development Bank (ADB) has maintained a continuous dialogue with the Government and provided technical assistance for improving the transport sector performance. 2 The Government has adopted numerous strategies and plans in addition to the RSDS. Four separate agencies, including a separate department managing the Bishkek–Torugart road corridor, will be set up to manage the international road corridors. Yet, it lacks a comprehensive time-based plan and the skilled people required for developing the transport sector. Public sector salaries and professional development programs are insufficient to attract and retain good workers.
2. Opportunities
8. Contribution to Regional Integration. The Kyrgyz Republic’s transport system is important for national economic and social development as well as for the central and south Asian economies. Improving transport infrastructure and border operations in the Kyrgyz Republic will lower the cost of domestic transport and international traffic as well as transit traffic. The Government is committed to “working together for trade openness, transport corridors for integrating the region and connecting to external markets, and for developing and sharing the region’s energy resources” during the Fourth Ministerial Conference on Central Asia Regional Economic Cooperation (CAREC) in Bishkek in 2005.3 The CAREC Transport and Trade Facilitation Strategy 4 supports this by (i) establishing competitive transport corridors across the CAREC region; (ii) facilitating efficient movement through corridors and across borders; and (iii) developing sustainable, safe, and user-friendly transport and trade networks. Cross-border transport procedures are being improved under several ADB-financed projects, and a cross-border agreement between the Kyrgyz Republic, PRC, and Tajikistan is being finalized under Grant 0084-KGZ: CAREC Regional Road Corridor Improvement Project. Developing a harmonized transport regulatory framework is one of the tasks undertaken by the CAREC Transport Sector Coordination Committee. Therefore, road improvements would complete the cycle needed to lower transport cost and time.
2 ADB. 2002. Technical Assistance Completion Report: Policy Support in the Transport Sector. Manila; and ADB. 2004. Technical Assistance to the Kyrgyz Republic for Improving Road Maintenance and Strengthening the Transport Corridor Management Department. Manila. 3 CAREC. 2005. Joint Ministerial Statement. Fourth Ministerial Conference on Central Asia Regional Economic Cooperation. Bishkek (5–6 November). 4 ADB. 2007. CAREC Transport and Trade Facilitation Strategy. Manila.
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9. Government Commitment. In addition to the RSDS, improving and maintaining road infrastructure is a high priority in the Country Development Strategy (2007–2010).5 The strategy calls for developing international road corridors to facilitate regional trade and transit traffic, as well as establishing legal and regulatory frameworks to encourage private sector participation in transport. Several other government policies are also directed at improving the efficiency of the transport sector based on market-oriented principles, and the Government has agreed with ADB to adopt the road sector master plan currently under development as part of CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project.6
10. ADB Strategy. The Project is consistent with ADB’s CAREC Regional Cooperation Strategy and Program7 and the Joint Country Support Strategy for the Kyrgyz Republic (2007– 2010). 8 It supports two strategic objectives: (i) increasing trade and integration with large markets in South Asia, the PRC, the Russian Federation, and Turkey; and (ii) improving economic cooperation to reduce transport costs and facilitate trade and transit—allowing Central Asian countries to become integrated and use their location to their advantage. Moreover, the Project will complement the ADB-led investment and policy dialogue in the country, and complete a key transport corridor connecting its capital Bishkek to Kashi in the PRC, and is consistent with the sector strategy of ADB, which is the lead development partner in the transport sector.
11. External Assistance. ADB is the Kyrgyz Republic’s main development partner in the road subsector. The Project is the eighth ADB-financed road project in the country, and would bring its total assistance for infrastructure and capacity development since 1996 to nearly $280 million (64% of its total development assistance to the country since 1995). These projects include the Bishkek–Osh–Irkeshtam road, the Kyrgyz Republic part of the road from Bishkek to Almaty in Kazakhstan, the Sary Tash–Karamyk road, and CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project (Project 1), which was approved in 2008. The Project is a continuation of Project 1 and the second in the phased rehabilitation plan for the corridor. The World Bank, Islamic Development Bank, Japan Bank for International Cooperation, and the PRC are the other donors to the road sector. The World Bank, the European Union, and the European Bank for Reconstruction and Development are proposing a combined assistance package of some $75 million to improve the Osh–Isfana road. Likewise, the Japan International Cooperation Agency is assisting MOTC to improve road maintenance and some important bridges. A summary of the projects financed by external agencies is in Appendix 3.
12. The Government is seeking additional external financing to complete ongoing works on the CAREC corridors, including $200 million for the Bishkek–Torugart road. The 2,800 km section of CAREC Transport Corridor 1 in Kazakhstan is being improved with the assistance of ADB, the European Bank for Reconstruction and Development, the Japan International Cooperation Agency, the Islamic Development Bank, and the World Bank.
5 Government of the Kyrgyz Republic. 2007. Country Development Strategy (2007 –2010). Bishkek. 6 ADB. 2008. Report and Recommendation of the President to the Board of Directors on a Proposed Asian Development Fund Grant to the Kyrgyz Republic for the CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project. Manila. 7 ADB. 2004. Regional Cooperation Strategy and Program for Central Asia Regional Economic Cooperation. Manila. 8 ADB. 2007. Kyrgyz Republic. Joint Country Support Strategy 2007–2010. Manila.
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3. Lessons
13. Implementation delays continue although they are much less now in comparison to the first ADB-financed Bishkek–Osh road rehabilitation project.9 Project planning and institutional experience in procurement and contracting were inadequate at the time. These deficiencies have been corrected through technical assistance, and guidance from ADB and other development partners. ADB has also reviewed the completion reports and audit reports of previous projects,10 and agreed with MOTC on a series of measures, including a transport sector master plan and an improved project management approach (described in paras. 26–28). These will be implemented in Project 1 and the Project. MOTC will also hire additional specialists to increase oversight of road network development impacts.
III. THE PROPOSED PROJECT
A. Impact and Outcome
14. The Project’s primary impact will be increased regional trade, particularly between the Kyrgyz Republic and the PRC, which will lead to less poverty in Naryn oblast. Its main outcomes will be higher accessibility and mobility.
15. The Project has a physical component and a nonphysical component. The physical component includes rehabilitating about 75 km of the Bishkek–Torugart road and constructing an inspection facility for managing international passenger and freight traffic. The sections that will be rehabilitated are located adjacent to the section rehabilitated under the Project 1 road. MOTC staff’s skills and knowledge will be improved under the nonphysical component. This will also be a continuation of Project 1—the human resource development part of the transport sector master plan development component.
B. Outputs
16. The main outputs are as follows:
(i) Some 75 km of 2-lane road (km 365–400 and km 439–479) with geometry and pavement structure improved to category III standards,11 improved bridges at km 388 and km 400, and an inspection (border control) facility close to km 479.
(ii) A professional development program for road sector professionals implemented according to the human resource development component of the transport sector master plan (2010–2025), which is under preparation.12
9 Financed through three ADB loans: ADB. 1996. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Kyrgyz Republic for the Road Rehabilitation Project. Manila; ADB. 1998. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Kyrgyz Republic for the Second Road Rehabilitation Project. Manila; and ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Kyrgyz Republic for the Third Road Rehabilitation Project. Manila. 10 ADB. 2004. Report and Recommendation of the President to the Board of Directors on a Proposed Loans and Technical Assistance Grants to the Kyrgyz Republic and the Republic of Tajikistan for the Regional Customs Modernization and Infrastructure Development Project. Manila. 11 As defined in Kyrgyz Republic road standards.
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C. Special Features
17. As part of the physical component, a comprehensive inspection facility (customs, immigration, health and quarantine, border control, etc.) to manage the movement of international freight and passenger traffic will be constructed in the vicinity of km 479 (about 60 km from the current inspection facility at Torugart). The new facility will solve at least two existing problems. One, the services and utilities in Torugart are inadequate to serve the increased staff of all the agencies that will be required to serve the post when traffic reaches the projected levels in 5 years. Two, the climate there is too harsh and living conditions are unfavorable. Therefore, the new facility will become the main border inspection point for traffic to and from the PRC while the post at the border in Torugart will be improved as part of Grant 0123-KGZ, and will serve as a screening point by border control (internal security) officials. For expediency and as a demonstration of interagency collaboration, the Government has agreed for construction works on this facility to be part of the civil works in the section from km 439 to km 479, and maintenance of the paved parking, and the facility access and egress roads to be included in the regular maintenance program of MOTC.
18. The other is an industry-university program in the nonphysical component to increase the knowledge and technical skills of road engineering graduates of Kyrgyz universities. Details of the program will be prepared as part of the transport master plan component under Grant 0123-KGZ: CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project, and will include (i) setting up at least five summer internship positions at MOTC for students seeking a career in transport; and (ii) offering at least two short courses (maximum 1 month duration) in transportation engineering and project management. These courses would be available to MOTC staff and university students, who can follow them to obtain a certificate of competency. The internship program and courses will be offered every year during the project implementation period, and will be designed in consultation with local technical universities, chambers of commerce, technical accreditation bodies, foreign universities, and the road industry— consultants, road transport operators, contractors, etc.
D. Project Investment Plan
19. The investment cost of the Project is estimated at $62.5 million, including taxes and duties of $6 million (Table 3 and Appendix 4).
12 Financed from ADB. 2008. Report and Recommendation of the President to the Board of Directors on a Proposed Asian Development Fund Grant to the Kyrgyz Republic for the CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project. Manila.
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Table 3: Project Investment Plan ($ million) Item Amount A. Base Costs a 1. Physical Component a. Civil Works 42.5 b. Construction Supervision and Contract Administration 2.5 2. Nonphysical Component a. Project Management 0.5 3. Duties and Taxes 6.0 Subtotal (A) 51.5 B. Contingencies b 10.0 C. Financial Charges During Construction 1.0 Total (A+B+C) 62.5 a In 2009 prices. b Comprised of physical contingences assumed to be about 10% of total base costs and price contingencies assumed to be made up of 0.8% on foreign exchange and 12% on local currency components of the total bases costs, and includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. Source: Asian Development Bank estimates.
E. Financing Plan
20. The Government has requested ADB to provide a grant of $22.0 million and a loan of $28.0 million (Special Drawing Rights 18,492,000) from its Special Funds resources to help finance the Project, which will cover 80% of the total cost of the Project. The Government will provide $12.5 million to cover part of the cost of the inspection facility and project contingencies, and all taxes and duties. The proposed financing plan is summarized in Table 4, and detailed in Appendix 4.
Table 4: Financing Plan ($ million) Source Amount % Asian Development Bank Grant 22.0 35.0 Asian Development Bank Loan 28.0 45.0 Government 12.5 20.0 Total 62.5 100.0 Source: Asian Development Bank estimates.
21. ADB revised its Asian Development Fund (ADF) grant framework in 2007.13 The revised framework provided that, for a country eligible for ADF grant assistance, the proportion of grants in the country program would be based on such country’s debt-distress classification. The Kyrgyz Republic is currently classified a country with moderate risk of debt distress and therefore will receive 50% of its performance-based allocation as grants, with a 20% volume discount applied to the grant portion of the performance-based allocation.
13 ADB. 2007. Revising the Framework for Asian Development Fund Grants. Manila.
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F. Implementation Arrangements
1. Project Management
22. MOTC, which is also the executing agency (EA) for ongoing ADB-financed projects,14 will be responsible for implementing the Project. With the assistance of international and national consultants, MOTC has, over the past 10 years, acquired a broad understanding of project management principles and ADB procedures to implement the Project effectively.
23. The project implementation unit (PIU) established by MOTC, which is managing Project 1 at present, will oversee and manage day-to-day activities of the Project. MOTC plans to strengthen the PIU’s current team of about 10 professionals within the next 2 years. Many of the current team members are aware of international best practices and ADB polices and procedures. They will be responsible for procurement of goods, works, and services; administering contracts; and ensuring project completion according to the schedules and covenants. No major social and environmental impacts have resulted from past road projects. However, as the road network expands and traffic increases, better planning, designing, and monitoring will be needed to manage impacts during and after construction. Therefore, MOTC is also planning to assign or recruit relevant safeguard specialists to the PIU.
24. ADB has assigned a team (staff from headquarters and the Kyrgyz Resident Mission) to manage the Project and ADB’s continuing road sector activities in the Kyrgyz Republic. This team will liaise with the PIU and regularly review the road sector portfolio performance while guiding MOTC on critical project administration matters. ADB and MOTC have drafted a project administration memorandum (Supplementary Appendix A) to ensure project delivery on time and within budget. It outlines the tasks to be performed by each party to maintain the schedule, ensure compliance with social and environmental safeguards, assure transparency and integrity, and report accurately. Additionally, MOTC will use web-based project management to allow better communication between field offices and the PIU. This will enable ADB to gain access to up-to-date information such as completed physical quantities, disbursements, outstanding payments, contractors’ claims, etc.
2. Implementation Period
25. The Project started in May 2009 with advance contracting, and will be completed by December 2013 when the warranty on civil works ends. The actual physical works will commence in April 2010. A summary of project activities and their schedules is in Appendix 5 and a detailed schedule is in the project administration memorandum (PAM).
3. Procurement
26. MOTC will procure works and goods financed by ADB according to ADB’s Procurement Guidelines (2007, as amended from time to time). Civil works in the Project have been packaged into two contracts—contract 1: km 365–km 400, and contract 2: km 439–km 479. These will be procured through international competitive bidding. In addition to road
14 ADB. 2004. Report and Recommendation of the President to the Board of Directors on a Proposed Loan and Technical Assistance Grant to the Kyrgyz Republic for the Southern Transport Corridor Road Rehabilitation Project. Manila, and ADB. 2008. Report and Recommendation of the President to the Board of Directors on a Proposed Asian Development Fund Grant to the Kyrgyz Republic for the CAREC Transport Corridor 1 (Bishkek– Torugart Road) Project. Manila.
9 rehabilitation works, contract 2 will include constructing the inspection facility in the vicinity of km 479.
27. Small works costing less than $1.0 million, although not anticipated at this stage, will be procured using the national competitive bidding procedure. National competitive bidding will be conducted according to the Law of the Kyrgyz Republic on Public Procurement of Goods, Works, and Services effective April 2004, subject to clarifications and modifications as agreed with ADB and as indicated in section C of the procurement plan. The procurement activities in the 18 months beginning in May 2009 are shown in Appendix 6.
4. Consulting Services
28. Supervising civil works, monitoring and evaluation, and, if necessary, reviewing and designing other parts of the Bishkek–Torugart road will be done by one international firm. This firm will also provide on-the-job training in various aspects of construction and maintenance of roads for MOTC staff. The firm will be selected by MOTC according to ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). The selected firm will also provide training in various aspects of construction and maintenance of roads for MOTC staff. The firm will be selected on the basis of full technical proposals evaluated using the quality- and cost- based selection (QCBS) or quality-based selection (QBS) method, or single source selection (SSS) method if appropriate justification can be provided. MOTC may use a weighting of 70:30 if the QCBS method is used.
29. Services of an independent audit firm will be procured to perform annual financial audits of the project accounts. Services of national and international individual consultants or international firms will be procured from time to time to assist the PIU staff (project management assistance) in special circumstances or to handle complex issues, as well as to help implement the master plan. When using the QCBS method, a cost-quality ratio of 70:30 based on simplified technical proposals may be used after discussing with ADB.
5. Advance Contracting and Retroactive Financing
30. To expedite the bidding process, ADB Management has, in principle, approved advance contracting and retroactive financing from the grant and loan proceeds for expenditures incurred on eligible civil works and consulting services. Advance contracting allows the Government to commence procurement activities, at its own risk, prior to signing of the financing agreements. The Government was informed that, for expenses incurred under advance contracting to be eligible for retroactive financing, such procedures (including advertising) must comply with ADB’s Procurement Guidelines and Guidelines on the Use of Consultants. Once the grant and loan become effective, up to 20% of the proceeds may be used to retroactively finance eligible expenditures incurred during the period not exceeding 12 months prior to signing of the financing agreements. Alternatively, the Government may opt for advance contracting without retroactive financing, in which case, the procurement procedures adopted under advance contracting do not conclude with the award of contract until after the grant and loan become effective. The Government acknowledges that any concurrence by ADB with the procedures, documentation, or proposal for award does not commit ADB to finance such expenses.
6. Anticorruption Policy
31. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the Government and the EA. Consistent with its commitment to good governance,
10 accountability, and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB’s Anticorruption Policy are included in the project financing agreements and the service and works contracts under the Project. In particular, all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of the EA and all contractors, suppliers, consultants, and other service providers as they relate to the Project.
32. For greater transparency and accountability, the Government will disclose to the public, and update annually, the current status, annual financial statements, and future plans of the road fund established by the Government in 1998 through local media and on the websites of the Ministry of Finance and MOTC. MOTC will also disclose (i) its annual financial statement of the funds it receives from the central budget, and (ii) the status and implementation progress of all donor-funded investment projects concerning the road sector. In particular, MOTC will disclose on its website information on how the proceeds of the loan and grant proceeds are used. For each contract financed under the Project, MOTC will disclose on its website information on, among others: (i) the list of participating bidders; (ii) name of the winning bidder; (iii) basic details on bidding procedures and procurement methods adopted; (iv) the amount of contract awarded; (v) the list of goods/services, including consulting services, procured; and (vi) the intended and actual utilization of the loan and grant proceeds under each contract.
7. Disbursement Arrangements
33. All disbursements of the ADB grant and loan under the Project will be carried out in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). To facilitate project implementation and funds flow, two separate imprest accounts will be established for the grant and the loan at a commercial bank acceptable to ADB and will be exclusively used to finance ADB’s share of eligible expenditures. MOTC will manage both imprest accounts. The initial advance to be deposited to the relevant imprest account will not exceed either 6 months of estimated expenditures or 10% of the grant or loan amount, as the case may be, whichever is lower. To expedite funds flow and simplify the documentation process, the statement of expenditures procedure will be used for liquidating and replenishing each imprest account for eligible expenditures not exceeding $50,000 per payment. The payments in excess of the statement of expenditures ceiling will be liquidated or replenished based on the supporting documentation process.
8. Accounting, Auditing, and Reporting
34. The EA will maintain separate accounts for all project components financed by ADB and the Government, and have them audited by an independent auditor that has adequate knowledge and experience of international accounting practices and is acceptable to ADB. The audited project accounts and the auditor’s reports will be provided to ADB within 6 months after the end of each fiscal year during implementation. The auditor’s report should include a separate opinion on the proper use of the imprest account and statement of expenditures procedures. The Government has been informed of ADB’s requirement for the timely submission of audited project accounts and financial statements, including the suspension of disbursements in case of noncompliance. The EA will prepare and submit to ADB quarterly and annual progress reports on project implementation, the form and content of which will be agreed with ADB. To facilitate evaluation of the Project, the Government will provide a project completion report to ADB within 3 months of physical completion of the Project.
11
35. A financial management assessment of the EA was conducted (details in Supplementary Appendix B) during the preparation of Project 1, and it concluded that the associated risks are low because of the EA’s adequate experience in project management. The EA has adopted an accrual accounting system supported by standardized accounting software. MOTC is subject to three levels of audit: (i) an internal audit by the Department of Economic and Financial Planning and Control, (ii) a statutory audit by the Chamber of Accounts of the Kyrgyz Republic, and (iii) a mandatory external audit for ADB-financed projects by an independent audit firm. ADB will reserve the right to verify the project accounts maintained by the EA as well as the accounts of the construction firms and consulting firms financed under the Project.
9. Project Performance Monitoring and Evaluation
36. ADB and MOTC have agreed on a set of indicators for monitoring and evaluating project performance in relation to its impact and outcome prior to its commencement. These include indicators from the project design and monitoring framework (Appendix 1). At the start of civil works, the EA will collate values of these indicators, which will be used as baseline values for monitoring purposes during project implementation. MOTC will follow the same systematic data collection procedure used for reporting the performance of past and ongoing projects. Although monitoring of different indicators will be done at different times and at different frequencies, reporting to ADB will be biannual. The performance and impact of the Project will be done both by MOTC and at completion of the Project, and 1 and 3 years after completion. A final report will consist of an evaluation of changes that occurred in the preceding 3 years. If necessary, MOTC will engage specialists to perform detailed assessment of socioeconomic, environmental, and technical impacts of the Project.
10. Project Review
37. The ADB team and the PIU team will maintain continuous oversight of the implementation activities with at least one detailed review every 12 months from the effective date of the financing agreement. The detailed reviews will be done in consultation with other staff of MOTC, officials of the Ministry of Finance, State Customs Committee, and other relevant agencies as well as public and private representatives from the project area. The review will focus on outputs, particularly those relating to institutional, administrative, technical, environmental, and social aspects to ensure project delivery is on time and on budget. The Project’s economic viability and other aspects that may have an impact on overall performance will be assessed after completion of the Project, or as necessary during implementation. The review will examine the implementation progress of the reforms and compliance with assurances specified in the financing agreement.
G. Stakeholder Consultation
38. During the project preparation—feasibility studies, environmental impact assessment, and social surveys—the Government, nongovernment organizations, local communities, road users, external aid agencies, and other project stakeholders were asked their needs and expectations. The consultants and ADB’s project team explained to them the road alignment, transport services, and the expected impacts and outcomes of the Project. There was a high degree of support from all parties, both private and public, individuals and groups. Similar meetings will be held throughout project implementation, and concerns and suggestions will be used to improve the project impact.
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IV. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS
A. Economic Benefits
39. The Project will bring immediate benefits to road users in the form of lower operating costs and travel time because of the improved surface of the project road and the transport master plan implementation, which would increase the efficiency of the overall road network and transport services. However, sustainable benefits will result in the medium to long term—after the entire Bishkek–Torugart road, Bishkek bypass road, and the international traffic management facilities are constructed. These benefits will be in the form of reduced travel time and increased economic activity resulting from tourism, agriculture, and mineral resources development in the Bishkek–Torugart corridor. About 1.5 million tons or half of the estimated total volume of Kyrgyz Republic–PRC trade in 2015 are expected to move on the Bishkek– Torugart road. Moreover, the road passes through three oblasts that have poverty levels above the national average of 46%. It will give better market access to the estimated 2.3 million people living in the corridor. In addition, about 51% of the project impact area population is female, which is the dominant gender in intra- and inter-oblast trade and commerce in the Kyrgyz Republic, and can benefit from the improved access.
40. The economic analysis entailed projecting direct costs and benefits for with- and without- project scenarios in accordance with ADB guidelines.15 The difference between the with- and without-project cost and benefits streams represents the net benefits of the Project. The economic analysis covers 25 years (2009–2032), comprising about 5 years for rehabilitating (including defects liability period) and 20 years of operation. The least-cost option was selected among mutually exclusive project alternatives and various pavement treatment options. Details of the economic analysis are in Appendix 7.
41. The estimated economic internal rate of return (EIRR) of the direct benefits accruing after improving the entire corridor is 14.4% and the net present value is $49.7 million. To test the impact of deviations of costs and benefits from the estimated averages, a series of sensitivity tests was performed. The deviations considered include the construction cost increasing by 20%, the implementation period extending by 3 years, and the 6% traffic growth rate continuing at 6% instead of increasing to 8% after 5 years. The tests suggested that the EIRR drops to 12% if the construction cost rises by 20%, but to about 13% if the other two events occurred.
B. Social and Poverty Impacts
42. The Project will have an indirect impact on poverty by stimulating economic development. The results of the social and poverty assessments undertaken are presented in the summary poverty reduction and social strategy in Appendix 8. While the Project aims to facilitate regional trade and thereby benefit major businesses and those involved in trade and commerce, it will also significantly benefit rural communities and especially the rural poor. In particular, it will increase the mobility of 2.3 million people living in three oblasts, which the Bishkek–Torugart road passes through, which have poverty levels below the national average of 46%. Since about 51% of the project impact area population is female, which is the dominant gender in intra- and inter-oblast (province) trade and commerce in the Kyrgyz Republic, the increased mobility would have special significance.
15 ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila.
13
43. Road construction work will create opportunities for direct and indirect employment over the 3-year implementation period. Thereafter, maintenance work, which will be outsourced to national firms, will create longer-term employment and service opportunities.
44. Information and periodic seminars on HIV prevention will be made available through the construction company to people directly and indirectly associated with the Project as well as to residents in the project area. These outreach activities will be designed by the construction company and approved by MOTC as part of the health and safety management part of the quality assurance and quality control plan, which will also support the Government’s national program. ADB will review and make specific recommendations, if necessary. The responsibility for preparing and implementing such a plan will be an integral part of the construction contract.
C. Social Safeguards
45. Classification of the Project for resettlement impact is category C. All civil works will take place within the existing right-of-way or on unused state-owned land. No relocation of households or acquisition of productive land is expected. Borrow pits or quarries are also available in state-owned empty land, within easy access and away from residential areas.
46. There are no groups with characteristics of indigenous people (as defined by ADB’s Policy on Indigenous Peoples [1998]) affected by the Project. Therefore, the Project is classified category C for its impact on indigenous people. In 2005, it was reported that the population in the project area consisted of 99% Kyrgyz and other nationalities included, Russians, Tajiks, Tatars, Uygurs, and Uzbeks who have lived in the same region for a long time and integrated in the same economic and social structure. The road alignment touches only the Kyrgyz settlements and none of them will be adversely affected.
D. Environmental Impacts
47. The environmental classification for the Project is category B. An initial environmental examination (IEE) was carried out in accordance with ADB’s Environment Policy (2002) and Environmental Assessment Guidelines. 16 It showed that the project road will not have a significant irreversible or permanent, negative environmental impact during or after rehabilitation. MOTC, in its contracts with the construction firm, will require it to elaborate and implement the environmental management plan (EMP) outlined in the IEE summary (Appendix 9), and abide by the environmental laws and regulations of the Kyrgyz Republic and ADB’s policies, procedures and guidelines, specifically its Environment Policy, to avoid or alleviate temporary impact.
E. Project Assumptions and Risks
48. There is a risk that the Project will be implemented late and over budget. There is also a risk that maintenance will be substandard and underfunded. Counterpart finance is always a concern, aggravated by the current global financial crisis. Project execution delays will cut the rate of return in achieving the expected results.
49. ADB is aware of these risks and is working closely with the Government on improving capabilities, maintenance financing and institutional effectiveness. The resident mission and the headquarters teams will join up with the MOTC team to ensure that execution schedules are
16 ADB. 2003. Environmental Assessment Guidelines. Manila.
14 kept in touch and that adequate budget allocation are made every year. The latter will be covenanted in the loan agreement.
50. ADB's dialogue with the Government is effective and constructive. The Government agrees with the risk assumptions and implementation proposals. It has also tapped other financiers to complete another 150 km by 2015.
V. ASSURANCES
51. In addition to the standard assurances, the Government and MOTC have given ADB the following assurances, which are incorporated in the financing agreement for the Project, to ensure the following:
(i) Counterpart funding. The amount of funds outlined in the project financing plan is available on time to enable completion of the Project on schedule, and subsequently adequate funds are allocated to operate and maintain the road throughout its service life.
(ii) Additional funding. Adequate funds are allocated and made available on a timely basis to operate and maintain the road sections rehabilitated under the Project throughout their service life. In addition, funding will be made available for rehabilitating the remaining sections of the Bishkek–Torugart road to allow rapid and uninterrupted flow of international passenger and freight traffic.
(iii) Capacity of the PIU and award of civil works contracts. Three months before the implementation of the first civil works contract under the Project commences, the capacity of the PIU is strengthened by, at least, increasing and recruiting adequate number of professional staff with specialization in the areas required for the Project.
(iv) Transparency and good governance. All transactions and payments are carried out in accordance with ADB’s fund disbursement procedures and all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB and the Government to audit and examine the records and accounts of all contractors, suppliers, consultants, and other providers of goods and services as they relate to the Project.
(v) Public access to information. Financial statements and implementation details of the Project including information on opportunities for works and services, procurement status, and contracts awards, are accessible to the public through the internet or at MOTC.
(vi) Construction quality. Stringent oversight is maintained on the consultants and contractors under the Project so that the services and works carried out under the relevant contracts conform to the standards and specifications required by the Project, and are of high quality.
(vii) Road operations. The relevant authorities and parties coordinate and maintain regular and quality services on the road sections rehabilitated under the Project during and after rehabilitation.
15
(viii) Environment. The road sections rehabilitated under the Project are designed, rehabilitated, maintained, and operated according to (a) all applicable national environmental laws and regulations, (b) ADB’s Environment Policy, and (c) the EMP for the Project. If there is any discrepancy between the applicable national laws and regulations, and the requirements of ADB’s Environment Policy, ADB’s requirements shall apply. In addition, all civil works contracts will include requirements to comply with the environmental mitigation measures in accordance with the IEE and the EMP. All civil works contractors will be supervised to ensure their compliance with the requirements of the IEE and the EMP.
(ix) Land acquisition and resettlement. Although no land acquisition and resettlement activities are required according to the current design, if either or both become necessary in any section of the road during rehabilitation, a resettlement plan or a short resettlement plan, as the case may be, will be prepared according to the applicable national laws and regulations, and the requirements of ADB’s Involuntary Resettlement Policy (1995), and submitted to ADB for approval before commencing any form of works in these sections. If there is any discrepancy between the applicable national laws and regulations, and the requirements of ADB’s Involuntary Resettlement Policy, ADB’s requirements shall apply.
(x) Equal opportunities and continuous consultation. There will be no gender, racial, or other forms of discrimination with regard to employment, salary, payment of compensation for land acquisition or resettlement, and other business opportunities arising from the Project. Consultations with residents and officials in the project areas will be regularly conducted on matters of social and cultural significance during the project implementation period.
(xi) Employment and labor. The contractors and consultants engaged under the Project are required to provide maximum possible opportunities for employment of the project area residents. Each of the civil works contractors of the Project will comply with all applicable national labor, health, and safety laws and regulations. In particular, each of the civil works contracts financed under the Project will (a) contain provisions prohibiting use of child labor, employment of illegal immigrants, and differentiation in wages between male and female workers for work of equal value; (b) include mandatory provisions requiring contractors and consultants to provide healthy, safe, and secure working conditions as well as adequate medical, life, and disability insurance for all its employees; and (c) have a requirement to conduct periodic awareness campaigns on sexually transmitted diseases and HIV/AIDS for its employees as well as service providers during the relevant contract period. All contractors and their employees will be required to observe local protocols concerning acceptable behavior toward the local population.
(xii) Illegal trafficking and border control. Concrete and rigorous measures to detect and prevent trafficking of humans, wildlife, endangered species, and illegal substances on the Bishkek–Torugart Road will be fully implemented, and the Government shall inform ADB of any incidents and action taken to prevent such incidents. In particular, the Government will ensure that (a) appropriate measures for controlling and monitoring the transportation of passengers and goods on the
16
road section between the inspection facility constructed under the Project at km 479 of the Bishkek–Torugart Road and the border control facility constructed under Grant 0123-KGZ(SF): CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project at Torugart shall be designed and implemented on a timely basis, and (b) such road section is rigorously patrolled at all times.
VI. RECOMMENDATION
52. I am satisfied that the proposed loan and the proposed grant would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve:
(i) the loan in various currencies equivalent to Special Drawing Rights 18,492,000 to the Kyrgyz Republic for the CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project 2 from ADB’s Special Funds resources with an interest charge at the rate of 1.0% per annum during the grace period and 1.5% per annum thereafter; a term of 32 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Financing Agreement presented to the Board; and
(ii) the grant not exceeding $22,000,000 to the Kyrgyz Republic, from ADB’s Special Funds resources, for the CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project 2, on terms and conditions that are substantially in accordance with those set forth in the draft Financing Agreement presented to the Board.
Haruhiko Kuroda President
19 June 2009
Appendix 1 17
DESIGN AND MONITORING FRAMEWORK
Performance Targets Data Sources and/or Design Summary and/or Indicators Reporting Mechanisms Assumptions and Risks Impact Assumption Increased regional trade Freight movement State Customs Committee Current bilateral and reduced poverty in between the PRC and data agreements between Naryn oblast the Kyrgyz Republic Kyrgyz Republic and the through Torugart PRC are strengthened increases from 300,000 tons in 2008 to 400,000 Risk tons by 2015 Current global economic crisis affects Kyrgyz The level of extreme National economic and Republic–PRC and overall poverty in the project social statistics regional trade impact area declines from 25% in 2007 to 20% by 2015
Outcome Assumption Higher accessibility and Travel time from Naryn Traffic and origin– Sufficient funds are mobility to Torugart is reduced destination surveys of available on time to from 5 to at most 4 MOTC complete improvements to hours by 2015 the entire Bishkek–Torugart road Average daily traffic Government statistics originating from Naryn Risk oblast will increase from Government allocation of 700 to 1000 by 2015 funds for outsourcing maintenance is inadequate Average time at ADB review missions and inspection point at MOTC’s progress reports Torugart reduced from 30 minutes per vehicle in 2009 to 15 minutes in 2013
Certified transportation professionals help increase total performance based maintenance contract value from nothing at present to at least $100,000 by 2013
2.3 million people's accessibility will be improved
18 Appendix 1
Performance Targets Data Sources and/or Design Summary and/or Indicators Reporting Mechanisms Assumptions and Risks Outputs Assumption 1. Improved pavement, International roughness Periodic progress reports MOTC maintains diligent bridges, and level of index of the pavement is of the contractor, periodic oversight of works and service in 75 km of the 3 or less by 2014 field visits, and efficiently administers Bishkek–Torugart road, beneficiary’s project contracts to deliver project including a multi-channel completion report on time inspections facility Risk 2. Human resource At least 5 internships at Rapid increases in development MOTC offered for construction costs recommendations of the university graduates and transport sector master 10 persons certified as plan implemented transportation professionals
Activities with Milestones Inputs 1.1 Advance contracting completed by December 2009 ADB loan: $28.0 million 1.2 Supervision consulting services commence by January 2010 ADB grant: $22.0 million Government: $12.5 million 2.1 Civil works completed by December 2012 2.2. Project road fully operational by December 2013 Total: $62.5 million
ADB = Asian Development Bank, km = kilometer, MOTC = Ministry of Transport and Communications, PRC = People’s Republic of China.
Appendix 2 19
ROAD SUBSECTOR ANALYSIS
A. Road Infrastructure
1. The road network in the Kyrgyz Republic spans all seven oblasts (provinces), and provides connections to remote communities and links to neighboring countries. The road network comprises 34,720 kilometers (km) of roads—18,810 km of public roads and 15,910 km of urban, rural, agricultural, industrial, and other roads. Roads carry about 95% of the country’s passenger traffic and more than half of the freight traffic (90% of domestic traffic). The total length of international roads is 4,163 km, national roads total 5,678 km, and local roads total 8,969 km. The length of paved public roads is 7,228 km, comprising 11 km of cement-concrete roads, 4,969 km of asphalt roads, and 2,248 km of bitumen treated gravel roads. The total length of gravel road is 9,961 km, and there is 1,621 km of unpaved roads.
2. About 18,800 km of roads (9,800 km of state roads and 9,000 km of local roads) are under the jurisdiction of the Ministry of Transport and Communications (MOTC) (Table A2.1). About 40% of the roads are sealed, including some with gravel mixed with bitumen binder. Over 50% are gravel and less than 10% are earth roads. Since most of the roads were originally designed for higher traffic volumes, the existing capacity is adequate for the level of economic activity likely to occur in the medium term. Consequently, the primary concern is not expansion or major upgrading of the roads, but rehabilitation and preservation. Roads at all levels are deteriorating; over 60% now require periodic maintenance or rehabilitation. Management of about 16,000 km, which were formerly under the state and collective farms, is now the responsibility of the district administrations.
Table A2.1: Summary of the Road Network, 2007 By Class International National Local Total Length (km) 4,163 5,678 8,969 18,810 % 22 30 48 100 By Type Paved Gravel Earth Road Total Length (km) 7,228 9,961 1,621 18,810 % 38 53 9 100 km = kilometer. Source: Ministry of Transport and Communications of the Kyrgyz Republic.
3. The road network was primarily developed under the former Soviet Union. However, neglect and insufficient funding for almost two decades caused a loss of about $1 billion in road assets. Survey data in 2005 found that two-thirds (out of 4,300 km) were in critical condition. One-fifth of the surveyed roads had deteriorated to the point where expensive reconstruction, not rehabilitation, was the only option; and about 200 km of paved road are reaching the same condition annually.
4. Since then, the Government has made improvement of road infrastructure one of its priorities, and started implementing its Road Sector Development Strategy for 2007–2010 1 (RSDS). The strategy has outlined ways to (i) rehabilitate key roads and maintain, (ii) create transport independence, (iii) improve road financing, (iv) involve the private sector in construction and maintenance, (v) involve local communities in local road maintenance,
1 Ministry of Transport and Communications, Kyrgyz Republic. 2007. Road Sector Development Strategy for 2007– 2010. Bishkek.
20 Appendix 2
(vi) reform MOTC and road network management, (vii) improve road safety, and (viii) use modern technologies in construction and management of roads. Eight road corridors, including the Bishkek–Torugart corridor, are identified in the strategy for rehabilitating by 2010. The Asian Development Bank is supporting this initiative, and the World Bank and European Bank for Reconstruction and Development are financing the Osh–Isfana improvements. The Government is also finalizing a program for improving local roads.
5. The cost of construction and maintenance has risen sharply during the past 3 years, and the Government may need more money than anticipated to implement the RSDS. Moreover, the technical standards and specifications of roads are aligned to road classification instead of level of usage. Therefore, the past tendency has been to build to a high standard rather than to meet traffic demand. A shift toward cost-based designing has begun with MOTC’s reorganization, but it will require a continuous dialog between all funding agencies and the Government to expedite this shift.
B. Vehicle Population
6. The number of registered vehicles had reached 271,000 by the end of 2007, including around 229,000 cars and buses, and 41,700 trucks (Table A2.2). This is equivalent to 54 vehicles per 1,000 people. The past growth rate, which has averaged about 5%, is expected to continue and even increase as the road conditions improve. Despite the decline in the number of trucks, it is expected to grow because of the increasing trade.
Table A2.2: Vehicle Population (Number) Vehicle Type 1992 1995 2000 2005 2006 2007 Cars/buses 176,643 200,043 191,423 202,520 220,359 229,644 Trucks 77,845 68,394 54,638 42,679 41,566 41,716 Total 254,488 268,437 246,061 245,199 261,925 271,360 Source: Ministry of Transport and Communications of the Kyrgyz Republic.
C. Institutions
7. The Automobile Roads Act allocates the main responsibility for planning and administration of road policies, programs, and projects to MOTC. Policy, regulation, planning, and development of other modes of transport and communications are also under the jurisdiction of MOTC. Parts of it are being reorganized, such as the unit responsible for implementing donor-financed projects, which was restructured in 2007 and again in early 2009. This is part of the Government’s drive to increase infrastructure efficiency and meet rapidly changing market conditions. Soon, the existing regional road agencies (PLUADs and UADs)2 will be downsized and the 58 local road maintenance units will be privatized. The Government is planning to consolidate its other regional operations gradually. It has created four separate corridor management departments to replace existing regional roads departments, and two more will be established in 2009. These departments will eventually be responsible for operating and maintaining the core international road network and the feeder roads.
8. Other important agencies in the road sector are (i) KyrgyzIntrans, a holding agency of six freight transport companies and forwarding agencies engaged mainly in international trade; and
2 These are Russian acronyms for regional road maintenance department (PLUAD) and the local road maintenance subdivision (UAD) of PLUAD.
Appendix 2 21
(ii) technical agencies in various stages of divestment under MOTC’s control, including the Road Design Institute (Kyrgyzdortransproekt) and a small agency responsible for developing and testing new road construction techniques and equipment (Kyrgyztranstekhnika).
D. Financing and Maintenance
9. The Road Fund enacted in 1998 has not served its intended purpose up to now. Taxes are collected in the name of the Road Fund, but are consolidated under the Government’s central budget of the Ministry of Finance. The Road Fund Council, with the responsibility to oversee the management of the Road Fund, was decreed in 2003, but has not yet met. A clearer and predictable financing mechanism, including a fully functional Road Fund, and revisions to the revenue structure and sources are expected when the RSDS is fully implemented.
10. The estimated cost of implementing the RSDS includes (i) $490 million needed for rehabilitating the remaining two key regional corridors, i.e., the Bishkek–Torugart road and Osh– Isfana road; and (ii) $48 million for annual maintenance of all MOTC-administered roads. While funds for improvement of regional corridors will be sourced mainly from international financial institutions, financing road maintenance at the required level remains a challenge. However, it has increased the total allocation for roads 11-fold since 2000, and threefold since 2005 (Table A2.3).
Table A2.3: Budgetary Allocation to the Road Subsector, 2000–2007 (Som ‘000) Item 2000 2003 2005 2007 Capital Investments 38,919 93,219 209,350 319,430 Road Maintenance 74,339 99,996 221,674 1,058,758 Administration 16,683 29,624 40,790 78,700 Total 131,941 224,842 473,819 1,458,895 Source: Ministry of Transport and Communications of the Kyrgyz Republic.
11. The Government has invested nearly three times more in 2007 in comparison to 2004, and donor financing has increased by about 160% (Table A2.4). About 60%–65% of the total government investment has been in maintenance. The total road sector financing from all sources is shown in Table A2.4.
Table A2.4: Financing for Road Sector, 2004–2007 (Som ’000) Item 2004 2005 2006 2007 A. Roads and Repair Maintenance 278,551.40 221,674.30 410,177.40 1,058,758.60 1. Roads Department 174,679.60 165,986.30 169,945.00 889,382.60 2. General Directorate Bishkek Osh 103,871.80 55,688.00 240,232.40 169,376.00 B. Government Investment Program: - Cofinancing of Projects 265,800.00 209,350.00 237,310.00 319,430.00 Subtotal from Budget (A + B) 544,351.40 431,024.30 647,487.40 1,378,188.60 C. External Financing of Investment Projects 748,176.00 773,564.00 967,667.40 1,204,899.80 Total (A + B + C) 1,292,527.40 1,204,588.30 1,615,154.80 2,583,088.40 Source: Ministry of Transportation and Communication of the Kyrgyz Republic.
12. Annual allocation for road maintenance is made up of two parts: the original allocation and supplementary allocation. The original allocation in 2003 was Som157.37 million. Usually at
22 Appendix 2 the middle of the year, following requests for emergency repairs (mostly caused by landslides), a supplementary budget is allocated. In 2003, an additional amount of Som67.5 million was allocated to MOTC (about Som42million for the Bishkek–Osh road and Som26 million for the rest of the network). Over the years, the supplementary budget varied while the original budget remained relatively consistent.
13. The average road maintenance expenditure of the MOTC network is $375 per km, but the distribution is skewed toward the Bishkek–Osh road. This amount is far lower than the quoted figure of $2,000 per km needed to maintain a road network adequately. Moreover, only 20% of the maintenance work is routine, giving a very low average figure of $60 per km for the network. In some cases, roads have deteriorated so much that the size of potholes does not permit any further routine maintenance and major repairs are needed.
14. The Bishkek–Osh Road Directorate accounts for about 10% of the total network but receives 40% of the annual budget allocation. On a per-kilometer basis, it means that in 2003 the Bishkek–Osh road spent $1,327 per km while over the rest of the network cost only $257 per km.
E. Safety
15. Accident statistics over the past 10 years are shown in Table A2.5. The rate of accidents has increased from 15 accidents per 1,000 registered vehicles to 17, and fatalities from about 3 per 1,000 registered vehicles to 5 from 2005 to 2007. The RSDS is aimed at changing this trend. The Permanent Secretariat for Road Safety, established in 2004 has been actively working to revise existing road safety guidelines and prepare a National Road Safety Program, which is expected to be approved in 2009.
Table A2.5: Road Traffic Accidents Number of Road Number of Number of Year Accidents Injuries Fatalities 1997 2,993 3,710 685 1998 2,864 3,453 585 1999 2,665 3,304 584 2000 2,670 3,292 610 2001 3,122 3,808 703 2002 2,966 3,561 725 2003 3,380 4,091 897 2004 3,275 3,969 892 2005 3,717 4,568 893 2006 3,911 4,948 1,051 2007 4,692 6,223 1,252 Source: Ministry of Transport and Communications of the Kyrgyz Republic.
F. Road Transport Services
16. Private firms carry more than 80% of the road-based freight and passenger traffic. Most state-owned road transport operators were privatized and foreign road transport operators are allowed to set up their businesses. Domestic freight charges and bus fares are market based, but the government sets the urban passenger transport fares, and cross-border and international transit tariffs. The Government has recently introduced vehicle licensing to enhance axle-load control and improve road safety.
Appendix 3 23
EXTERNAL ASSISTANCE TO THE ROAD SUBSECTOR
Loan/TA/Project Amount Date Project Name Number ($ million) Approved A. Asian Development Bank
L1444-KGZ Road Rehabilitation 50.00 Jun 1996 L1630-KGZ Second Road Rehabilitation 50.00 Sep 1998 L1775-KGZ Almaty–Bishkek Regional Road Rehabilitation 5.00 Oct 2000 L1853-KGZ Third Road Rehabilitation 40.00 Oct 2001 L2106-KGZ Southern Transport Corridor Road Rehabilitation Project 32.80 Feb 2005 G0084-KGZ CAREC Regional Road Corridor Improvement Project 25.30 Oct 2007 G0123-KGZ CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project 20.00 Nov 2008 Total 223.10
T2256-KGZ Road Rehabilitation 0.60 Dec 1994 T2587-KGZ Institutional Strengthening of the Road Sector 0.80 Jun 1996 T2760-KGZ Second Road Rehabilitation 0.60 Feb 1997 T3065-KGZ Policy Support in Transport Sector 0.60 Sep 1998 T3335-KGZ Third Road Rehabilitation 0.60 Dec 1999 T3531-KGZ Improvement of the Road Sector Efficiency 0.44 Oct 2000 T3757-KGZ Institutional Support in the Transport Sector 0.65 Oct 2001 T4444-KGZ Improving Road Maintenance and Strengthening the Transport 0.80 Corridor Management Department Jan 2005 Facilitation of Transport Cooperation among Central Asia T6294-REG 0.65 Regional Cooperation (CAREC) Countries (Phase I) Dec 2005 T6309-REG Maintenance of Regional Road Transport Corridors Project 0.50 May 2006 Small Scale TA for CAREC Transport Corridor Transport T7066-KGZ 0.015 Corridor Mar 2008 Total 6.26
B. Japan Bank for International Cooperation
Loan Road Rehabilitation Project 28.00 Jun 1996 Loan Second Road Rehabilitation Project 40.80 Sep 1998 Total 68.80
C. World Bank
L3410-KGZ Urban Transport Project 22.00 Aug 2000
D. Islamic Development Bank
TA Feasibility Study for Bishkek–Torugart Road 0.34 Nov 1995 Loan Rehabilitation of Uzgen–Jalal-Abad Road 10.00 Oct 1998 Loan Rehabilitation of Suusamyr–Talas–Taraz Road 10.00 Aug 2003 Loan Osh-Irkeshtam Road Reconstruction Project 17.30 Aug 2008 Loan Rehabilitation of Suusamyr–Talas–Taraz Road (Phase II) 11.20 Jun 2008 Total 48.84
E. European Union
TA Feasibility Studies of Osh–Irkeshtam and Osh Isfana Roads 2.00 1998 TA Development of Coordinated National Transport Policies 1.25 2006 TA Pre-Feasibility and Feasibility Studies for Road Sections of the 1.40 Termez–Dushanbe–Sary-Tash Road 2006 Total 4.65
F. People’s Republic of China
Loan Rehabilitation of Osh–Irkeshtam Road (I) 7.2 2004 Loan Rehabilitation of Osh–Irkeshtam Road (II) 25.3 2008 Total 32.5 CAREC = Central Asia Regional Economic Cooperation, KGZ = Kyrgyz Republic, L = loan, REG = regional, TA = technical assistance. Source: Ministry of Transport and Communications of the Kyrgyz Republic.
24 Appendix 4
DETAILED COST ESTIMATES
Table A4.1: Detailed Cost Estimates by Expenditure Category and Financier ($ million) Total % of Total Item ADB Government Cost Base Cost A. Base Costsa 1. Physical Component a. Civil Works i. Civil Works - km 365–400 18.0 0.0 18.0 35.0 ii. Civil Works - km 439–479b 22.0 2.5 24.5 47.6 Subtotal Civil Works 40.0 2.5 42.5 82.5 b. Consulting Services i. Construction Supervision 2.0 0.0 2.0 3.9 ii. Project Managementc 0.5 0.0 0.5 1.0 Subtotal Consulting Services 2.5 0.0 2.5 4.9 Subtotal Physical Component 2. Nonphysical Component a. Consulting Services i. Project Managementd 0.5 0.0 0.5 1.0 Subtotal Physical Component 0.5 0.0 0.5 1.0 3. Taxes and Dutiese 0.0 6.0 6.0 11.7 Total Base Cost (A) 43.0 8.5 51.5 100.0
B. Contingencies 1. Physical Contingencyf 4.0 2.0 6.0 11.7 2. Price Contingencyg 2.0 2.0 4.0 7.8 Total Contingencies (B) 6.0 4.0 10.0 19.4
C. Financial Charges During Constructionh 1.0 0.0 1.0 1.9
Total Project Cost (A+B+C) 50.0 12.5 62.5 121.4 ADB = Asian Development Bank, km = kilometer. a In mid-2008 prices. b Includes inspection facility. c Contract administration and project implementation costs. d Transport master plan implementation support to the Ministry of Transport and Communications. e Value-added tax for all civil works and associated consulting services and import duties on materials and equipment. f Assumed to be approximately 12% of total base cost. g Assumed to be approximately 0.8% on foreign exchange costs and 12% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. h Financing charges on the ADB loan. Source: Asian Development Bank estimates.
Table A4.2: Detailed Cost Estimates by Financier ($ million) ADB Loan ADB Grant Government Item Cost % of Cost % of Cost % of Cost Amount Category Amount Category Amount Category A. Investment Costs 1. Civil Works 48.2 22.0 46 18.0 37 8.2 17 2 Consultants a. Project Management 2.7 1.4 51 1.1 42 0.2 7 b. Capacity Development 0.6 0.3 46 0.2 38 0.1 17 Total Base Cost 51.5 23.7 46 19.4 38 8.5 17 B. Contingencies 10.0 3.3 33 2.7 27 4.0 40 C. Financing Charges During Implementation 1.0 1.0 100 0.0 0 0.0 0 Total Project Cost 62.5 28.0 45 22.0 35 12.5 20 % Total Project Cost 100.0 45 35 20 ADB = Asian Development Bank. Source: Asian Development Bank estimates.
Appendix 4 Appendix 25
26 Appendix 5 2013 defects liability period 2011 2012 2009 2010 PROJECT IMPLEMENTATION SCHEDULE Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Project Project
Rehabilitation of Section Road Km 400–439 ofWorks Supervision Advance ContractingAdvance for Works Civil Contractors and ConstructionDesign Supervision Review Rehabilitation Works Km 365–400 (35 km) and Km (40 km)439–479 ContractingAdvance for Consultants Contract Administration Implementation and Masterplan Physical Component Physical Component Nonphysical Activity Grant- 0123-KGZ Ongoing KGZ = Kyrgyz Republic, = Kyrgyz KGZ km = kilometer, = quarter.Q Communications. and Transport of Ministry and Bank Development Asian Source:
Appendix 6 27
PROCUREMENT PLAN
Project Name: CAREC Transport Corridor 1 Grant Number: to be assigned (Bishkek – Torugart Road), Project 2 Loan Number: to be assigned Grant Amount: $22.0 million Executing Agency: Ministry of Transport and Loan Amount: $28.0 million Communications Date of first Procurement Plan: 22 May Date of this Procurement Plan: 22 May 2009 2009 CAREC = Central Asia Regional Economic Cooperation.
A. Process Thresholds, Review, and 18-Month Procurement Plan
1. Project Procurement Thresholds
1. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works.
Procurement of Goods and Works Method Threshold International Competitive Bidding for Works Above $1,000,000 International Competitive Bidding for Goods Above $500,000 National Competitive Bidding for Goods $500,000 or below Shopping for Works Below $100,000 Shopping for Goods Below $100,000
2. ADB Prior or Post Review
2. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the Project.
Procurement of Goods and Works Procurement Method Prior or Post Comments International Competitive Bidding for Works Prior International Competitive Bidding for Goods Prior National Competitive Bidding for Goods Prior Shopping for Works Prior Shopping for Goods Prior
Recruitment of Consulting Firms Single Source Selection Prior If appropriate justification can be provided Quality- and Cost-Based Selection Prior Other selection methods: CQS, LCS, QBS, or Prior To be determined SSS during implementation Recruitment of Individual Consultant Individual Consultants Prior CQS = consultant’s qualification selection, LCS = least-cost selection, QBS = quality-based selection, SSS = single source selection.
28 Appendix 6
3. Goods and Works Contracts Estimated to Cost More Than $1 Million
3. The following table lists goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.
Contract Procurement Prequalification Advertisement General Value Method of Bidders Date Description ($ million) (Yes/No) (quarter/year) Comments Civil Works $42 ICB No Q2/2009 ICB = international competitive bidding.
4. Consulting Services Contracts Estimated to Cost More Than $100,000
4. The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.
Contract Recruitment Advertisement International General Value Method Date or National Description ($ million) (quarter/year) Assignment Comments Construction 2.0 QBS, QCBS, Q2/2009 International Quality-cost Supervision or SSS ratio for QCBS 70:30. SSS if appropriate justification provided. CQS = consultant’s qualification selection, QCBS = quality- and cost-based selection, SSS = single source selection.
5. Consulting Services Contracts Less than $100,000
5. The following table groups smaller-value goods, works, and consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.
Value of Procurement/ General Contracts Number of Recruitment Description (cumulative ) Contracts Method Comments Project $0.5 million Up to 10 CQS, LCS, and Each contract Management individual less than consultant $100,000 External Financial $0.1 million 1 CQS or LCS Audit CQS = consultant’s qualification selection, LCS = least-cost selection.
B. Section 2: Project Procurement Plan
1. Indicative List of Packages Required Under the Project
6. The following table provides an indicative list of all procurement (goods, works, and consulting services) over the life of the Project.
Appendix 6 29
Estimated Value Estimated Domestic ($ million, Number of Procurement Preference General Description cumulative) Contracts Method Applicable Comments Works Civil works contract 18.0 1 ICB No package for One-envelope rehabilitation of single stage Bishkek–Torugart road, section km 365–400 Civil works contract 24.5 1 ICB No package for One-envelope rehabilitation of single stage Bishkek–Torugart road, section km 439–479 and customs facilities Consulting Services Construction 2.0 1 QCBS or QBS No Quality-cost Supervision with FTP or SSS ratio for QCBS 70:30. SSS if appropriate justification provided.
Project Management 1.0 several QCBS, CQS, No Procurement LCS, or method to individual be consultant determined depending on need. Quality-cost ratio for QCBS 70:30. External Financial Audit 0.1 1 CQS or LCS No CQS = consultant’s qualification selection, FTP = full technical proposal, ICB = international competitive bidding, km = kilometer, LCS = least-cost selection, QBS = quality-based selection, QCBS = quality- and cost-based selection, SSS = single source selection.
C. National Competitive Bidding 1. General 7. The procedures to be followed for national competitive bidding shall be for tendering with unlimited participation and the two-stage tendering set forth in Law of the Kyrgyz Republic on Public Procurement of Goods, Works and Services effective on April 2004, with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of ADB’s Procurement Guidelines (2007, as amended from time to time). 2. Eligibility
8. ADB: The eligibility of bidders shall be as defined under section I of ADB’s Procurement Guidelines, published by ADB in April 2006. Accordingly, no bidder or potential bidder should be declared ineligible to ADB-financed contracts for reasons other than those provided by section I
30 Appendix 6 of ADB’s guidelines. Bidders must be nationals of member countries of ADB; and offered goods, works, and services must be produced in and supplied from member countries of ADB.
3. Prequalification
9. Normally, post-qualification shall be used unless explicitly provided for in the loan agreement and procurement plan. Irrespective of whether post qualification or prequalification is used, eligible bidders (both national and foreign) shall be allowed to participate.
4. Registration and Licensing
(i) Bidding shall not be restricted to pre-registered or licensed firms.
(ii) Where registration or licensing is required, bidders (a) shall be allowed a reasonable time to complete the registration or licensing process; and (b) shall not be denied registration or licensing for reasons unrelated to their capability and resources to perform the contract successfully, which shall be verified through post-qualification.
(iii) International bidders shall not be precluded from bidding. If a registration or licensing process is required, an International bidder declared the lowest evaluated bidder shall be given a reasonable opportunity to register or to obtain a license.
5. Bidding Period
10. The minimum bidding period is 28 days prior to the deadline for the submission of bids.
6. Bidding Documents
11. Procuring entities should use standard bidding documents for the procurement of goods, works, and services acceptable to ADB.
7. Preferences 12. No preference shall be given for national bidders and for nationally manufactured goods.
8. Advertising
13. Invitations to bid shall be advertised in at least one widely circulated national daily newspaper or freely accessible, nationally known website, allowing a minimum of 28 days for the preparation and submission of bids.
14. Bidding of national competitive bidding contracts estimated at $500,000 equivalent or more for goods and related services or $1,000,000 equivalent or more for civil works shall be advertised on ADB’s website via the posting of the procurement plan. 9. Bid Security 15. Where required, bid security shall be in the form of a bank guarantee from a reputable bank.
10. Bid Opening and Bid Evaluation
(i) Bids shall be opened in public.
Appendix 6 31
(ii) Evaluation of bids shall be made in strict adherence to the criteria declared in the bidding documents, and contracts shall be awarded to the lowest evaluated bidder.
(iii) Bidders shall not be eliminated from detailed evaluation on the basis of minor, non-substantial deviations.
(iv) No bidder shall be rejected on the basis of a comparison with the employer’s estimate and budget ceiling without ADB's prior concurrence.
(v) A contract shall be awarded to the technically responsive bidder that offers the lowest evaluated price and who meets the qualifying requirements set out in the bidding documents.
(vi) No negotiations shall be permitted.
(vii) Price verification shall not be applied.
11. Rejection of All Bids and Rebidding
16. Bids shall not be rejected and new bids solicited without ADB’s prior concurrence.
12. Participation by Government-Owned Enterprises
17. Government-owned enterprises in the Kyrgyz Republic shall be eligible to participate as bidders only if they can establish that they are legally and financially autonomous, operate under commercial law, and are not a dependent agency of the contracting authority. Furthermore, they will be subject to the same bid and performance security requirements as other bidders.
13. Right to Inspect/Audit
18. A provision shall be included in all national competitive bidding works and goods contracts financed by ADB requiring suppliers and contractors to permit ADB to inspect their accounts and records and other documents relating to the bid submission and the performance of the contract, and to have them audited by auditors appointed by ADB.
14. Fraud and Corruption
(i) The Beneficiary shall reject a proposal for award if it determines that the bidder recommended for award has, directly or through an agent, engaged in corrupt, fraudulent, collusive, or coercive practices in competing for the contract in question.
(ii) ADB will declare a firm or individual ineligible, either indefinitely or for a stated period, to be awarded a contract financed by ADB, if it at any time determines that the firm or individual has, directly or through an agent, engaged in corrupt, fraudulent, collusive, coercive, or obstructive practices in competing for, or in executing, an ADB-financed contract.
15. National Sanctions List
19. National sanctions lists may be applied only with prior approval of ADB.
32 Appendix 7
TRAFFIC FORECAST AND ECONOMIC ANALYSIS
A. General
1. Increasing speed and reducing surface roughness by rehabilitating the 500 kilometer (km) Bishkek–Torugart road—part of the Central Asia Regional Economic Cooperation (CAREC) Transport Corridor 1,1 connecting the Kyrgyz Republic with the People’s Republic of China (PRC)—would benefit road users as well as vehicle owners. An earlier study of the feasibility of rehabilitating this road showed that an investment of about $200 million would be needed, and the economic internal rate of return (EIRR) on the investment would be nearly 15% and the net present value (NPV) of the benefits nearly $40 million over the 25-year life of the road. The economic analysis examined the expected contribution of the project road to the country and region, based on a comparison of with- and without-project scenarios in accordance with the Guidelines for the Economic Analysis of Project of the Asian Development Bank (ADB).2 The analysis covers 2009–2032, comprising 5 years of implementation and 20 years of operation, expressed in mid-2008 dollar prices.
2. The section from km 400 to km 439 will be the first to be rehabilitated. It is financed under the CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project 3 (Project 1), financed by ADB. About 75 km (km 365–km 400 and km 439–km 479) will be rehabilitated under the present project—CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project 2 (the Project)—at a total cost of $62.5 million, which would include a customs inspection facility at km 479. The present analysis used the base data from Project 1, with some adjustments to traffic growth and rates and costs, to account for the economic slowdown since mid-2008.
B. Road Condition and Traffic
3. Road Condition. The Bishkek–Torugart was divided into nine sections for the purpose of economic analysis. The basic characteristics of each section are summarized in Table A7.1. The table also shows alternative routes (diversions), including (i) a parallel road to the Bishkek bypass (east) that passes through settlements until it reaches Buruldai junction at km 82, and (ii) a 65-km alternative route to the Kuvaki Pass section via the town of Balykchi.
1 One of the six CAREC regional corridors included in ADB. 2007. CAREC Trade and Transport Facilitation Strategy. Manila. 2 ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila. 3 ADB. 2008. Report and Recommendation of the President to the Board of Directors on a Proposed Asian Development Fund Grant to the Kyrgyz Republic for the CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project. Manila.
Appendix 7 33
Table A7.1: Road Condition Data Road Surface Seal Formation Cracking IRI No. Section Name Length Type (m) (m) (%) (m/km) (km) 1. Bishkek Bypass (east) (km 9–18) B 9 7.5 13.0 15 5.0 2. Bishkek Bypass (east) (km 18–82) B 64 17.5 22.0 20 5.4 3. Chim Korgon–Buruldai (km 82–103) B 21 14.5 17.0 30 5.7 4. Buruldai–Kuvaki Junc. (km 103–146) B 43 8.5 12.5 30 7.0 5. Kuvaki Pass Sec. (km 146–214) B 26 5.5 7.5 40 7.9 6. Kuvaki Sec–Dolon Pass (km 214–280) B 66 8.5 11.0 40 7.0 7. Dolon Pass–Char Pass (km 280–365) B 87 7.0 8.0 50 7.9 8. Char–Ak Beit Pass (km 365–476) B 103 6.9 8.5 60 8.5 9. Ak Beit–Torugart Pass (km 476–539) G 69 0.0 7.5 0 10.0 Existing Diversions 1. Parallel to Bishkek Bypass B 80 10.0 15.0 15 5.0 2. Alternative to Kuvaki Pass Section B 68 8.2 10.5 20 8.5 B = bitumen, G = gravel, IRI = international roughness index, km = kilometer, m = meter. Source: Asian Development Bank estimates.
4. Existing Traffic. Short traffic counts taken in various sections, adjusted for seasonal, variations were used to estimate average annual daily traffic shown in Table A7.2. Using these as base volumes, normal and diverted volumes were forecast over the project life and are shown in Table A7.3.
Table A7.2: Base Year Annual Average Daily Traffic, 2008 (vehicles per day) Trucks Motor- Section Name Cars Vans Buses 2/3- Multi- Total cycles axle axle Bishkek Bypass (east) (km 9–18) 9 3,587 399 96 180 114 4,385 Bishkek Bypass (east) (km 18–82) 7 2,692 299 72 135 86 3,291 Chim Korgon–Buruldai (km 82–103) 29 3,833 629 97 174 77 4,839 Buruldai–Kuvaki Junc. (km 103–146) 7 2,760 546 95 142 87 3,637 Kuvaki Pass Sec. (km 146–214) 1 1,064 144 10 93 58 1,370 Kuvaki–Dolon Pass (km 214–280) 31 992 80 11 117 97 1,328 Dolon Pass–Char Pass (km 280–365) 0 870 36 13 83 61 1,063 Char–Ak Beit Pass (km 365–476) 1 217 11 2 19 50 300 Ak Beit–Torugart Pass (km 476–539) 0 10 4 0 7 69 90 Existing Diversions Parallel to Bishkek Bypass 25 1,987 423 48 81 16 2,580 Alternative to Kuvaki Pass Section 1 714 102 10 76 32 935 km = kilometer. Source: Asian Development Bank estimates.
5. Traffic Forecasts. The traffic forecasts are based on expected growth in gross domestic product, income elasticities of demand, and regional trade patterns. Additionally, it was assumed that (i) political stability and strong macroeconomics would continue in the Kyrgyz Republic, (ii) the governments of the Kyrgyz Republic and the PRC would remain committed to regional cooperation and completing improvements to the Bishkek–Torugart road, and (iii) planned external assistance to the road subsector in the Kyrgyz Republic would be received on time.
6. Both normal passenger and freight traffic was assumed to grow at an average annual rate of 8% from 2009 to 2013, and thereafter passenger traffic at 10% and freight traffic at 12%.
34 Appendix 7
Generated passenger traffic was assumed to grow at 7% and freight traffic at 10% as in Project 1. The estimated traffic from 2013 to 2032 at selected intervals is shown in Table A7.3.
Table A7.3: Forecast Annual Average Daily Traffic, 2008–2032 (vehicles per day) Trucks Motor- Section Name Year Cars Vans Buses Total cycles 2/3-axle Multi- axle Bishkek Bypass (east) 2008 9 3,587 399 96 180 114 4,385 (km 9–km 18) 2014 12 6,790 755 183 368 233 8,341 2020 17 12,030 1,338 324 727 461 14,897 2026 22 21,311 2,371 573 1,434 910 26,621 2032 30 37,755 4,200 1,015 2,831 1,795 47,626 Bishkek Bypass (east) 2008 7 2,692 299 72 135 86 3,291 (km 18–km 82) 2014 9 5,096 567 137 276 175 6,260 2020 12 9,029 1,004 243 545 346 11,179 2026 17 15,995 1,779 430 1,077 683 19,981 2032 22 28,335 3,152 762 2,125 1,348 35,744 Chim Korgon–Buruldai 2008 29 3,833 629 97 174 77 4,839 (km 82–km 103) 2014 41 7,257 1,191 183 357 159 9,188 2020 55 12,856 2,110 325 704 313 16,363 2026 73 22,775 3,738 575 1,390 618 29,169 2032 98 40,348 6,623 1,019 2,744 1,220 52,052 Buruldai–Kuvaki Junc. 2008 7 2,760 546 95 142 87 3,637 (km 103–km 146) 2014 9 4,131 816 142 216 133 5,447 2020 14 9,258 1,830 317 573 353 12,345 2026 18 16,401 3,241 562 1,132 696 22,050 2032 25 29,056 5,742 995 2,234 1,375 39,427 Kuvaki Pass Sec. 2008 1 1,064 144 10 93 58 1,370 (km 146–km 214) 2014 2 1,752 237 16 159 98 2,264 2020 2 3,104 420 28 314 194 4,062 2026 3 5,500 743 50 619 383 7,298 2032 4 9,743 1,317 88 1,223 755 13,130 Kuvaki Sec–Dolon Pass 2008 31 992 80 11 117 97 1,328 (km 214–km 280) 2014 43 1,878 151 20 239 198 2,753 2020 58 3,326 267 36 472 391 4,962 2026 77 5,893 473 63 931 772 8,966 2032 103 10,440 837 112 1,838 1,524 16,247 Dolon Pass–Char Pass 2008 0 870 36 13 83 61 1,063 (km 280–km 365) 2014 0 1,647 68 24 170 124 2,033 2020 0 2,917 121 43 335 245 3,661 2026 0 5,168 215 76 661 483 6,603 2032 0 9,155 380 134 1,305 953 11,927 Char Pass–Ak Beit Pass 2008 1 217 11 2 19 50 300 (km 365–km 476) 2014 1 411 21 4 39 103 579 2020 2 727 37 7 76 203 1,052 2026 2 1,289 66 12 151 400 1,920 2032 3 2,283 117 22 298 789 3,512 Ak Beit–Torugart Pass 2008 0 10 4 0 7 69 90 (km 476–km 539) 2014 0 19 7 0 14 141 181 2020 0 34 13 0 28 279 354 2026 0 59 23 0 56 551 689 2032 0 105 40 0 111 1,087 1,343 km = kilometer. Source: Asian Development Bank estimates.
Appendix 7 35
C. Economic Costs
7. Construction Costs. The economic costs were estimated based on the financial cost of the capital expenditure, including physical contingencies, but excluding price contingencies, interest during construction, and taxes and duties. It was assumed that the financial crisis of 2008 has not had a significant effect on costs as evidenced by the current prices of bitumen, cement, steel, etc., and people’s value of time. Using a world price numeraire, non-tradable costs were converted from financial to economic costs by applying a standard conversion factor of 0.85. 4 The construction period of the project road was estimated based on the project implementation schedule. The least-cost option was selected among mutually exclusive project alternatives and various pavement treatment options. Options analyzed were (i) rehabilitation, (ii) partial reconstruction, and (iii) full reconstruction and new alternative alignments. In all cases, partial and/or full reconstruction of the road within the existing right-of-way was preferred, depending on the existing condition of the road. Project capital costs are shown in Table A7.4.
Table A7.4: Capital Costs ($ million) Road Total Costa Per Kilometer Cost No. Length Section Name Financial Economic Financial Economic (km) 1. Bishkek Bypass (east) (km 9–18) 9 3.835 3.259 0.426 0.362 2. Bishkek Bypass (east) (km 18–82) 64 24.848 21.120 0.388 0.330 3. Chim Korgon–Buruldai (km 82–103) 21 7.824 6.651 0.373 0.317 4. Buruldai–Kuvaki Junc. (km103–146) 43 19.042 16.185 0.443 0.376 5. Kuvaki Pass Sec. (km 146–214) 26 14.932 12.692 0.574 0.488 6. Kuvaki Sec–Dolon Pass (km 214–280) 66 23.095 19.631 0.350 0.297 7. Dolon Pass–Char Pass (km 280–365) 87 44.699 37.994 0.526 0.447 8. Char–Ak Beit Pass (km 365–476) 103 44.987 38.239 0.405 0.344 9. Ak Beit–Torugart Pass (km 476–539) 69 25.970 22.075 0.412 0.350 Total 488 209.232 177.846 km = kilometer. a Exclusive of contingencies and taxes. Source: Asian Development Bank estimates.
8. Maintenance Costs. It was assumed that the existing gravel and/or paved surfaces would require about $1,200 per km annually for routine maintenance, and paved road sections would require resealing with a single bituminous layer every 5–7 years at an average cost of $35,000 per km. These rates are based on Project 1 data, which are not expected to change as a result of the economic crisis.
9. Road User Costs. Vehicle cost data by vehicle type and road condition of each road section used in the Project for forecasting vehicle operating costs and road agency costs for the with- and without-project cases were used in the present analysis, with minor modification to operating costs to reflect lower gasoline prices compared with 2008.
10. Additional benefits, such as savings in environmental and road accident costs, were not calculated as there is no reliable data and the current level of traffic on the project road is relatively low. It is assumed that savings that could be accrued from these contributors are currently negligible.
4 Economic conversion factor is adopted from ADB. 2008. Report and Recommendation of the President to the Board of Directors on a Proposed Asian Development Fund Grant to the Kyrgyz Republic for the CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project. Manila.
36 Appendix 7
D. Economic Benefits and Rate of Return
11. Assuming a 5-year construction period for the entire road, the Highway Development and Management Model (HDM-4) was used to estimate the incremental economic costs and benefits for each road section over the 20-year service life. The aggregate costs and benefits are shown in Table A7.5. The estimated EIRR over the 20-year service life is 12.8% and the NPV is $10.8 million. However, the HDM predicts that the road could be functional at a diminishing level of service and benefits until the terminal year 2036. The EIRR reaches 14.4% and the NPV increases to $49.7 million when the terminal value is considered. The underlying assumptions after 2030 are (i) traffic growth gradually declines to 6% per annum in line with gross domestic product growth, and (ii) upkeep of the road becomes uneconomical and the road will be allowed to deteriorate to a level until it is reconstructed in 2037.
Table A7.5: Corridor Improvement Costs and Benefits ($ million) Economic Benefits Economic Costs Net Year Normal + Diverted Generated Economic Capital Recurrent VOC Time VOC Time Benefit 2009 26.760 0.000 0.000 0.000 0.000 0.000 (16.721) 2010 55.526 0.000 (2.777) (0.004) 0.000 0.000 (54.633) 2011 50.558 0.000 (3.353) (0.005) 0.000 0.000 (51.602) 2012 22.054 0.000 (0.392) 0.001 0.104 0.000 (21.832) 2013 4.742 0.168 3.683 0.064 0.267 0.006 (0.485) 2014 0.000 0.269 8.490 0.078 0.711 0.008 10.450 2015 0.000 0.323 8.501 0.082 0.718 0.008 9.618 2016 0.000 0.288 8.692 0.084 0.729 0.008 12.099 2017 0.000 0.257 7.830 0.062 0.667 0.006 11.973 2018 2.525 0.230 7.189 0.063 0.612 0.006 5.377 2019 1.852 0.205 7.665 0.064 0.646 0.006 7.258 2020 1.591 0.183 7.258 0.066 0.620 0.007 7.614 2021 0.000 0.164 6.870 0.068 0.588 0.007 7.557 2022 0.000 0.146 7.377 0.069 0.624 0.007 8.510 2023 0.000 0.130 7.577 0.073 0.647 0.007 8.414 2024 0.000 0.116 8.300 0.077 0.711 0.008 10.655 2025 1.142 0.104 7.376 0.075 0.623 0.007 8.241 2026 0.838 0.093 5.587 0.050 0.487 0.005 5.291 2027 0.720 0.083 6.593 0.048 0.576 0.005 6.967 2028 0.000 0.074 6.145 0.034 0.530 0.003 6.931 2029 0.000 0.066 6.450 0.032 0.563 0.003 7.196 2030 0.000 0.059 6.405 0.031 0.561 0.003 8.000 2031 0.000 0.053 4.050 0.029 0.355 0.003 4.437 2032 (7.040) 0.047 5.272 0.050 0.456 0.005 12.824 NPV 161.269 3.059 130.787 1.191 11.795 0.119 14.139 EIRR 12.80% ( ) = negative, EIRR = economic internal rate of return, NPV = net present value, VOC = vehicle operating costs. Notes: 1. Annual costs and benefits are discounted at 12%. 2. Negative costs indicate incremental costs saved under the project would have been incurred without the Project. Source: Asian Development Bank estimates.
Appendix 7 37
E. Sensitivity Analyses
12. To test the impact of deviations of costs and benefits from the estimated averages (base case), a series of sensitivity tests was performed. These include increasing the construction cost by 20%, increasing the implementation period by 3 years, and a 6% traffic growth rate instead of 8% in the initial 4 years. The EIRR dropped to 11% if the construction cost rises by 20%, but the drops were just over 1% if the other two possibilities occurred.
Table A7.6: Sensitivity Analysis EIRR Scenario (%) Base case with terminal values 14.4 Capital cost increases by 20% 12.0 Implementation period is extended by 3 years 12.9 Traffic growth reduced to 6% 12.7 EIRR = economic internal rate of return. Source: Asian Development Bank estimates.
38 Appendix 8
SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY
Country/Project Title: Kyrgyz Republic/CAREC Transport Corridor 1 (Bishkek–Torugart Road) Project 2
Lending/Financing Department/ Central and West Asia Department/ Project Modality: Division: Transport and Communications Division
I. POVERTY ANALYSIS AND STRATEGY A. Linkages to the National Poverty Reduction Strategy and Country Partnership Strategy
The Project is one of the priority infrastructure projects identified in the Country Development Strategy for 2007–2010 (formerly National Poverty Reduction Strategy).a It is also listed as a firm project in the country strategy and partnership for the Kyrgyz Republic in 2008.b Both the Asian Development Bank (ADB) and the Government recognize the importance of regional cooperation to the landlocked Kyrgyz Republic—trade, transport, and energy are the priority areas for socioeconomic development. The government's and development agency strategies support the Government’s approach to reducing poverty and achieving the Millennium Development Goals by balancing social goals with the need to stimulate growth through improving market access to rapidly growing neighboring markets and investing in agriculture to create economic opportunities in rural areas where most of the poor reside. The Project directly supports one of the goals in the country partnership strategy, which is to improve trade and road linkages with regional markets.
B. Poverty Analysis Targeting Classification: Targeted intervention - Geographic
1. Key Issues
The Project is not a targeted poverty intervention. Nevertheless, by stimulating economic development, it will have significant poverty reduction impact and benefits. While the Project aims to facilitate regional trade and thereby benefit major businesses and those involved in trade and commerce, it will also benefit rural communities and especially the rural poor.
2. Design Features
No specific pro-poor design features are included under the Project.
II. SOCIAL ANALYSIS AND STRATEGY A. Findings of Social Analysis
The Project will indirectly benefit more than 2 million people living in the Bishkek–Torugart road corridor, 51% of whom are women dominant in intra- and inter-oblast (province) trade and commercial activities in the Kyrgyz Republic. Two of the three oblasts through which the road passes have poverty levels that are below the national average of 46%. Extreme poverty in these two oblasts is almost double the national average of 13.5%. These are mainly rural oblasts where agriculture is the main source of income for the residents. They consider improvement of the road to be critical for developing these areas.
Road construction work would create several opportunities for direct and indirect employment over the 3-year implementation period. Thereafter, the maintenance work, which will be outsourced to national firms, will create longer-term employment and service opportunities.
Information and periodic seminars on HIV prevention will be made available through the construction company to people directly and indirectly associated with the projects as well as to residents of the project area. These outreach activities will be designed by the construction company and submitted to the Executing Agency (Ministry of Transport and Communications) for approval as part of the health and safety management part of the quality assurance and quality control plan. ADB will review and make specific recommendations, if necessary. The responsibility for preparing and implementing such a plan will be an integral part of the construction contract.
Appendix 8 39
B. Consultation and Participation 1. Provide a summary of the consultation and participation process during the project preparation.
2. What level of consultation and participation (C&P) is envisaged during the project implementation and monitoring? Information sharing Consultation Collaborative decision making Empowerment
3. Was a C&P plan prepared? Yes No
During preparation of the stakeholder participation analysis, representatives of the Ministry of Transport and Communications (MOTC) and ADB’s consultants carried out socioeconomic surveys and held public meetings at village, akimiat (village cluster), and/or rayon (district) levels. These surveys and meetings raised awareness and gained local support. There were extensive consultations with local communities at Naryn and At-Bashi in selecting the final road alignment; and due consideration was given to technical, environmental, social, resettlement, and economic impacts of the selected road alignment.
Initial consultation revealed that the Project will not negatively affect people’s livelihoods, social and cultural habits, incomes, and the way of participating in socioeconomic development activities of the local communities. Therefore, the Project does not involve sensitive social or participatory issues, and no concerns were raised by the interested groups. Project stakeholders expressed support for the Project. Consultation will continue throughout project implementation to address implementation- related issues.
C. Gender and Development 1. Key Issues
While women should benefit from the Project, some may be exposed to sexually transmitted diseases and HIV/AIDS because temporary workers will be employed on the Project, and traffic and tourism are expected to increase.
2. Key Actions
Measures included in the design to promote gender equality and women’s empowerment—access to and use of relevant services, resources, assets, or opportunities and participation in decision-making process: Gender plan Other actions/measures No action/measure
The project documents will have specific provisions to address (i) gender equality in employment opportunities related to civil works, (ii) non-gender-based discrimination in labor standards, and (iii) gender dimensions of possible negative externalities of increased risk of HIV/AIDS and human trafficking.
III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS Significant/Limited/ Plan or Other Measures Issue No Impact Strategy to Address Issue Included in Design
Involuntary Limited/No Impact All project activates will be Full Plan Resettlement limited to existing right-of-way. Short Plan No resettlement or land Resettlement Framework acquisition action is expected. No Action
Indigenous Peoples Limited/No Impact In 2005, the population in the Plan project area comprised 99% Other Action Kyrgyz and few Russian, Tajiks, Indigenous Peoples Tatars, Uygurs, and Uzbeks. Framework Although the cultures and No Action languages of the minorities differ, there are many similarities and historically they have lived in the same region. They are integrated in the same economic and social structure.
40 Appendix 8
Significant/Limited/ Plan or Other Measures Issue No Impact Strategy to Address Issue Included in Design Moreover, the project road alignment touches only the Kyrgyz settlement and none of the ethnic minorities will be affected.
Labor No Impact The Project is expected to Plan Employment create equal employment Other Action opportunities opportunities for all social No Action Labor retrenchment groups. Core labor standards
Affordability No Impact The Project does not involve Action tolling or user-pay schemes and No Action affordability is not expected to be an issue.
Other Risks and/or Limited Impact The Kyrgyz Republic is in the Plan Vulnerabilities early stages of the HIV/AIDS Other Action HIV/AIDS epidemic. However, HIV/AIDS No Action Human trafficking is still identified as a potential Others(conflict, political risk. A public awareness instability, etc), please campaign for HIV prevention specify will be included as part of the overall project management. The Executing Agency, with the help of project supervision consultants, will design specific links with national and donor- assisted HIV prevention programs and monitor implementation. Specific provisions will be included in the bidding documents for civil works, requiring contractors to conduct health and safety programs for workers employed under the Project and for the risk of sexually transmitted diseases, including HIV/AIDS. IV. MONITORING AND EVALUATION
Are social indicators included in the design and monitoring framework to facilitate monitoring of social development activities and/or social impacts during project implementation? Yes No a Government of the Kyrgyz Republic. 2007. Country Development Strategy (2007–2010). Bishkek. b ADB. 2007. Kyrgyz Republic. Joint Country Support Strategy 2007–2010. Manila.
Appendix 9 41
SUMMARY INITIAL ENVIRONMENTAL EXAMINATION
A. Introduction
1. Purpose of the Project. The main purpose is to rehabilitate part of the Bishkek– Torugart road, which is a 539 kilometer (km) international road linking the Kyrgyz Republic with the People’s Republic of China (PRC). The Kyrgyz Republic’s Country Development and Road Sector Development strategies for 2007–20101 identified rehabilitation of the Bishkek–Torugart road as one of the priority tasks in the transport sector. Therefore, the Government, acting through its Ministry of Transport and Communications (MOTC), has requested the Asian Development Bank (ADB) and other donors to finance upgrading the road to improve safety, lower vehicle operating costs, improve market access for people in the region, and increase trade and transit links between the Kyrgyz Republic and the PRC.
2. Rehabilitation will be done in phases. The first phase will include the section between the Dolon Pass and Ak Beit Pass (km 280–km 480). The sections from Ak Beit to the border with the PRC and from the Dolon Pass to Bishkek will be included in subsequent phases.
3. Summary Initial Environmental Examination. An initial environmental examination (IEE) of the first phase was made in 2008 in accordance with ADB’s Environmental Assessment Guidelines.2 The IEE covered the sections (km 365–km 400 and km 439–km 479) to be improved under the Central Asia Regional Economic Cooperation (CAREC) Transport Corridor 1 (Bishkek– Torugart Road) Project 2 (the Project). This is the summary of the IEE report.
4. Scope of the Initial Environmental Examination. The scope included (i) collection of information related to the environmental conditions along the proposed road section, (ii) assessment of potential environmental impacts, (iii) development of preventive and/or mitigation measures for significant impacts, (iv) assessment of alternative alignments and technologies, (v) elaboration of environmental management and environmental monitoring plans, and (vi) public consultation.
B. Project Description
5. Type and Category of Project. The Project involves improvement of the existing road and construction of inspection facilities. The main activities include (i) earthwork and erosion control, (ii) concrete and drainage works, (iii) asphalt concrete works, (iv) traffic safety measures, and (v) construction of inspection areas and buildings. No significant realignment of the centerline is expected, which would encroach on previously undisturbed areas. No construction and/or rehabilitation of feeder roads are included in the Project. The environmental classification for the Project is category B under the ADB environmental categorization requirements.
6. Location. The Bishkek–Torugart road is located in the east–central part of the Kyrgyz Republic and links its capital (Bishkek), Issyk-Kul and Naryn oblasts (provinces), and Xingjian Uygur Autonomous Region of the PRC. The IEE covers road sections located in Naryn and At- Bashi rayons (districts) of Naryn oblast (Figure A9).
1 Government of the Kyrgyz Republic. 2007. Country Development Strategy (2007–2010). Bishkek. 2 ADB. 2003. Environmental Assessment Guidelines. Manila.
42 Appendix 9
Figure A9: Dolon Pass–Ak Beit Pass Section (km 280–km 480)
km = kilometer. Source: Ministry of Transport and Communications.
7. Magnitude of Operation. The road sections from the Dolon Pass to the Ak Beit Pass will be rehabilitated as a two-lane road, with a carriageway width of 7 meters (m) and a roadbed width of 15 m (road category III, according to Kyrgyz Republic road standards SNIP 2.05.02- 85). 3 The proposed improvement options are (i) road upgrading on the existing alignment; (ii) road safety (road markings, road signs, and guide posts); and (iii) reconstruction of a number of bridges and culverts.
8. Alternatives Considered. If the no-action alternative is adopted, the existing road will continue to deteriorate, transportation costs and travel times will continue to increase, and access of local communities to markets in Bishkek will be affected. Alternatives on the location and the technology of improving the Bishkek–Naryn–Torugart road suggested in previous projects were as follows:
(i) Providing a bypass of Naryn town from the west. This alternative was determined not feasible as it runs through a residential part of the town for 6.0– 7.5 km and can cause substantial noise and air pollution, and reduce road safety.
3 SNIP is a Russian abbreviation for “construction rules and regulations”, a standard that extends to the design of new roads and reconstruction of existing roads.
Appendix 9 43
(ii) Landslide-prone area at Kyzyl-Bel Pass (km 355–km 357). Three alternatives were examined: providing a bypass of the landslide-prone section, a viaduct solution, and using the existing route. The Kyrgyz Design Institute, which is the design arm of MOTC, defined using the existing route in combination with geotechnical measures toward landslide as the optimal alternative.
(iii) Providing a bypass of the At-Bashi Ridge from the east. This would require construction of a long section of new road through a remote and relatively undisturbed area. Construction of a new road was determined to be beyond the scope of the Project.
C. Description of the Environment
9. The potentially affected environment is described pursuant to ADB’s Environmental Assessment Guidelines in terms of its physical, ecological, and socioeconomic resources, each of which is summarized below.
1. Physical Resources
10. Topography. The section is located within the mountain system of the Internal Tien- Shan. The section begins near the Dolon Pass (altitude 3,030 m) at km 280. From the Dolon Pass, the right-of-way (ROW) descends to the Karaunkur–Ottuk Gorge and continues to the Middle Naryn Valley, where it passes through the eastern part of Naryn town (altitude 2,100 m) and crosses the Naryn River. A few kilometers farther on, the section ascends to the Kyzyl Bel Pass (altitude 2,500 m) and Char Pass (2,600 m), and crosses them to enter the At-Bashi Valley. The section traverses the At-Bashi Valley parallel to the At-Bashi Ridge, until it reaches the western part of the ridge. It then turns south and ascends to the Ak Beit Pass (altitude 3,284 m), crosses the northern branch of the At-Bashi Ridge, and continues down to the Arpa Valley. The final point of the section is located at the Ak Beit Pass in the Arpa Valley at km 476.
11. Geological and Seismic Characteristics. Geologically, the section is located within the Middle Tien-Shan that is separated from the North Tien-Shan by so-called “Nikolaev line”. The line (fault) crosses the section several kilometers to the south of the Dolon Pass. The whole section lies within the area where the probability of an earthquake is assessed as 82, i.e., two seismic events with a magnitude of 8 points on the Richter scale over 100 years.
12. Soils and Permafrost. The project area comprises a number of soils that belong to soils of mountain slopes and soils of intermountain valleys: mountain meadow steppe subalpine soil, mountain dark-chestnut soil, mountain light-chestnut soil, mountain valley light-chestnut soil, mountain light-chestnut soil, mountain valley light-brown soil, and mountain meadow steppe alpine soil. The top of the Dolon Pass (km 282–km 283) and the Ak Beit Pass (km 464–km 476) are located within island permafrost distribution areas.
13. Climate and Air Quality. The climate in the Internal Tien-Shan is continental with little rain, cool summers, and cold winters. Climatic conditions vary considerably with elevation. The average winter temperature ranges from –25°С to –45°С (the lowest may exceed –54°С), while in summer it varies from 20°С to 30°С. In winter, frosts occur in all regions. Rain and snow usually fall in autumn, winter, and spring. Average yearly precipitation is 230–560 millimeters. The air quality is generally good, except on un-surfaced sections where dust generated from passing vehicles was observed. There are no ambient air quality monitoring stations near the section.
44 Appendix 9
14. Hydrology. The alignment crosses the River Naryn, the largest in the Kyrgyz Republic, as well as two other major rivers, the At-Bashi and the On-Archa. On descent from the Dolon Pass, it runs parallel to the Karaunkur and Ottuk rivers. High groundwater tables occur in Kara- Suu and Ottuk villages. An initial visual assessment suggests that water quality is good. This appears to be confirmed by reports that the rivers support a healthy and diverse population of fish and macroinvertebrates. Chemical analysis and analysis of macrozoobenthos in major rivers of the project area was carried out as part of the environmental assessment. The chemical analysis of samples from the Naryn, At-Bashi, On-Archa, and Karaunkur rivers was conducted in the laboratory of the Kyrgyz Agency on Hydrometeorology. It was concluded that the water quality of all the samples was good, and pollutant concentrations were within acceptable standards. The presence of a diverse range of macrozoobenthos species supports this finding.
15. Natural Hazards. Natural hazards related to the section include landslides, mudflows and seasonal flooding, rockfalls, and avalanches. The section is susceptible to a massive landslide in the proximity of the Kyzyl–Bel Pass at km 355–km 356. The possibility of mudflow exists at km 300, 306, 312, 451, and 455. At km 60, the ROW is currently destroyed by a mudflow. Rockfalls can pose a risk to the section at km 285–km 303 and km 354–km 355. Avalanche-prone areas are located in the Karaunkur–Ottuk Gorge at km 287–km 313, and the Kyzyl–Bel and Char passes at km 353–km 362.
16. Noise and Vibration. The majority of the alignment runs through areas with no settlements, but only mountains, hills, and open steppe. Rare settlements through which the road corridor runs are Naryn town and the villages of Karaunkur, Ottuk, Kara-Suu, and Karabulung. Although no sensitive receptors such as schools and hospitals were noted near the ROW, noise and vibration are a serious concern to the communities; this was raised repeatedly during public consultations. Dwellings are typically made of clay brick. For those located close to the roadside, noise and vibration from heavy trucks have the potential to affect the houses and their occupants significantly. In addition, it was noted during the field investigations that the actual speed of vehicles passing through the settlements often exceed the speed limits. This contributes to safety and noise problems.
2. Ecological Resources
17. Flora. The distribution of flora in the project area fulfills the vertical zoning rule. Subalpine meadows are typical of the Dolon Pass. At lower altitudes, they change to fescue steppe, artemisia deserts, and cropland near Naryn town. Fescue steppe occurs to the south of Naryn. The At-Bashi Valley is largely cropland, which changes to fescue steppe in the western part of the valley. In the Ak Beit Pass area, the flora is typical high-altitude meadow steppe. In the Karaunkur–Ottuk Gorge, the road passes through areas of Naryn forestry with floodplain and slope forests.
18. Fauna. The faunal associations dominant in the project area are shown in Table A9.1.
Appendix 9 45
Table A9.1: Dominant Terrestrial Faunal Associations Terrestrial Fauna Area Amphibians Reptiles Birds Mammals Dolon Pass lidless skink red-mantled rose Tien-Shan shrew, finch, rufous-backed narrow-skulled redstart vole
Karaunkur Gorge, green toad lidless skink rock and white- gray marmot, Kyzyl-Bell Pass, east capped bunting, mouse, gray and west part of At- linnet, chukar hamster Bashi Valley
Ottuk Gorge green toad steppe Isabelline and tolai hare, runner common chat, pink- Siberian jerboa billed lark
Middle Naryn Valley, green toad steppe white and yellow house mouse, central part of At- runner, chat, red-headed gray hamster Bashi valley diced snake bunting
Ak Beit Pass green toad lidless-skink Isabelline and mole vole, common chat, marmot, narrow- Hodgson's rosy skulled vole finch, snow finch Source: 1987. Natural Environment and Resources. Atlas of the Kyrgyz Republic. Vol. 1. Moscow.
19. Ecosystems. Twenty-two ecosystems are distinguished in the Kyrgyz Republic, and seven of them were found in the project area. An assessment of ecosystems health by biological indicators (in points, from 1 = poor to 3 = excellent) was undertaken as part of this IEE. Table A9.2 presents the results of the study.
Table A9.2: Assessment of Ecosystem Health in the Study Area Assessment Ecosystem ( 1= poor to 3 = excellent) Alpine Sub-Alpine 2 Mid-mountain Herbaceous 1.5 Mid-mountain Spruce Forest 2.5 Mid-mountain Floodplain Forest 2.3 Mid-mountain Steppe (lower reaches of Karaunkur River) 1.5 Mid-mountain Steppe (middle reaches of Karaunkur River) 2 High-Mountain Meadow Steppe 2 Source: Asian Development Bank estimates.
20. The condition of ecosystems can be assessed “satisfactory”. Sensitive ecosystems identified by the survey are mid-mountain spruce forest, mid-mountain floodplain, alpine/subalpine and high-mountain meadow steppe. The survey also reports that the migratory routes of hoofed mammals pass near the Ak Beit (km 473–km 474) and Dolon passes (km 283).
46 Appendix 9
21. Protected Areas. The section does not run through any especially protected area. One protected area is found close to the project area—the Salkyn–Tor State Natural Park, several kilometers to the east of the road corridor (Figure A9). According to International Union for Conservation of Nature classification, a national park (category II) is a protected area managed mainly for ecosystem protection and recreation.
3. Socioeconomic Resources
22. Industry and Agriculture. Industry in Naryn oblast is represented by the electric power industry, mining, food processing, and the construction materials industry. Naryn oblast is an important agricultural region, specifically in animal agriculture. It supports a large population of sheep and horses. In 2005, the industrial production of Naryn oblast was Som754.1 million and agricultural production was Som4,786.1 million.
23. Tourism. Naryn oblast has vast tourist potential that is presently not exploited. Major tourist attractions in Naryn oblast are Tash-Rabat (a caravanserai dating to the 15th century), the site of the ancient town of Koshoi-Korgon, and the high-altitude Song-Kul Lake.
24. Land Use. The Land Code of the Kyrgyz Republic specifies the following land-use categories: (i) agricultural land; (ii) settlement land; (iii) land of industry, transport, communication, defense, and other nonagricultural purposes; (iv) lands of specially protected natural territories; (v) forest land; (vi) water land; and (vii) reserve land. The land use in the project area is mostly agricultural; pasturelands are prevalent in mountain areas, while croplands are prevalent in the valleys. The Law on Highways specifies the category “land of road transport”.
25. Non-Transport Infrastructure. Infrastructure within the section is represented by electric power lines, telecommunication lines, water supply systems, irrigation systems, and canalization systems. As the section crosses non-transport infrastructure in Naryn and other portions of the project area, coordination with the relevant authorities will be required.
26. Transport Networks. The Bishkek–Naryn–Torugart road is an international road corridor and one of two roadways linking the Kyrgyz Republic and the PRC. On a larger scale, the road is part of CAREC Transport Corridor 1 linking Kashi in the PRC to Almaty in Kazakhstan.
27. Population and Communities. Naryn oblast’s population was reported as 266,500 people (2006), the majority of whom (82.2%) live in rural areas. Communities served by the road include Karaunkur, Ottuk, and Naryn (in Naryn rayon), and At-Bashi, Kara-Suu, and Karabulung (in At-Bashi rayon) villages. Karaunkur (km 295) is a small village comprising about 10 houses located in Karaunkur Gorge. There is one three-storey building and several clay-brick dwellings. Ottuk (km 314–km 316) is a larger settlement with a population of about 1,300 people. Houses are mostly made of clay brick. Naryn town (km 347–km 352) with a population of about 40,000 is the largest settlement. This stretch has both multi-storey buildings and small dilapidated houses. At-Bashi (population 11,300) is a rayon center several kilometers from the alignment. Other settlements in the project area are Kara-Suu (km 410) with a population of 4,540, and Karabulung (km 417) with 1,508 inhabitants; the alignment runs through both villages. People usually use clay brick to build their houses. Ak Beit is a very small village of five houses at km 464. The ethnic composition in the project area is homogeneous and consists of virtually only Kyrgyz people.
Appendix 9 47
28. Cultural and Historical Heritage. According to the List of Historical and Cultural Sites of National Significance, there are 12 historical and archeological sites in Naryn rayon and 28 in At-Bashi rayon. Although none of the sites are located within the ROW, some of them are within several kilometers of it. There are also about 10 Muslim graveyards in the proximity of the road.
D. Screening of Potential Environmental Impacts and Mitigation Measures
29. Potential impacts have been identified by reviewing each relevant parameter and screening out insignificant impacts from those that can have significant adverse impacts in the construction and operation phases of the Project. It was concluded that implementation of the Project will have significant social benefits and, if the prescribed mitigation and management measures are fully implemented, it is unlikely to have major adverse environmental impacts.
1. Physical Resources
a. Topography
30. Impacts. Topographic impacts could occur because of altered road embankments, borrow-pit excavations, and quarry operations.
31. Mitigation. No significant cut and fill operations are required, so no significant impacts to topographic characteristics are anticipated.
b. Soil and Permafrost
32. Impacts. Soil impacts may occur because of altered road embankments, borrow-pit excavations, and quarry operations. However, no significant cut and fill operations are anticipated. Provided that erosion prevention measures in the construction and operation phases are taken, no substantial adverse impacts to soils are foreseen. No long-term impacts to area soils caused by increased pollutant levels are anticipated. The permafrost island areas occur at altitudes of more than 3,000 m, so potential impacts to the permafrost areas are likely to occur during the construction and operation phases near the Dolon (km 282–km 283) and Ak Beit passes (km 364–km 376).
33. Mitigation. Mitigation measures include integration of the geocryological considerations into the detailed design by surveying at the pre-project stage the current condition of permafrost at the Dolon and Ak Beit passes, identifying and mapping areas of concern (if any), and developing mitigation measures. The mitigation measures may include the avoidance of areas with degraded permafrost and engineering measures.
c. Air Quality
34. Impacts. Air quality impacts could occur in both the construction and operation phases, but no significant violations of standards are anticipated amid the provisions noted below.
35. Mitigation. Contracts will require asphalt and hot-mix plants to be located at least 500 m from the nearest sensitive receptor (e.g., schools, hospitals, or communities), and they will not be located within sensitive ecosystems. Operators will be required to install emission controls. Blasting (if any) will be carried out using small charges, and dust-generating items will be conveyed under cover. Road surfaces and excavation and construction sites will be sprayed with water to keep them moist for dust control. Trucks carrying earth, sand, or stone will be
48 Appendix 9 covered with tarpaulins to avoid spillage. Contracts will require pre-construction and routine air quality monitoring. Construction sites, asphalt plants, quarries, and transportation roads will be monitored for total suspended particles during the construction phase. An ambient air quality monitoring station will be set up in Naryn town to monitor pollution in the vicinity of the road corridor in the operation phase. (Currently, there is no ambient air quality station in Naryn.) The upgraded road will improve air quality and reduce dust emissions, as the sections of road that do not have an asphalt surface will be upgraded and covered with asphalt.
d. Surface and Groundwater
36. Impacts. Surface water impacts could occur during the construction period as a result of the erosion and construction activities. Provided that road drainage systems are improved, enhancement of water quality can occur at the operation phase. No impacts are anticipated to availability of water for domestic or agricultural use, except in Naryn town where water supply pipelines may be temporarily impacted during construction. Potential impacts to local water supplies include the possibility of temporary labor camps wastewater disposal during the construction period. No impacts to groundwater resources are anticipated as a result of the proposed activities in the road corridor in either the construction or operation phases.
37. Mitigation. The Project will install adequately sized drainage facilities to accommodate foreseeable flood levels, and will stabilize downstream slopes with concrete or rock gabions or walls to avoid erosion. Potential adverse impacts to the surface hydrology in the construction phase of the Project will be avoided through the enforcement of contract provisions. Such provisions will ensure that construction camps and other potential sources of secondary impacts are properly sited and provided with drainage and wastewater facilities. Water quality will be monitored by chemical analysis and bio-indicators during construction and operational phases. Monitoring points will be located at the Karaunkur, Ottuk, On-Archa, Naryn, and At-Bashi rivers.
e. Natural Hazards
38. Impact. Landslides, rockfalls, avalanches, and mudflows may be triggered by different natural and anthropogenic factors, pose hazards to people and infrastructure, and may block roads.
39. Mitigation. For the landslide-prone area (km 355–km 357), the Design Institute proposes using the existing road in combination with the geotechnical measures. Mitigation measures for rockfall-prone areas will include installation of rockfall retaining structures and rockfall warning signs as will be decided in the detailed design stage of the Project. Mudflows will be mitigated by installation of box culverts. Artificial release of avalanches with artillery (a commonly used method for avalanche control in the Kyrgyz Republic) will be used.
f. Noise and Vibration
40. Impacts. According to local people from Karaunkur, Ottuk, Kara-Suu, and Karabulung villages living in proximity to the road, noise and vibration have an impact on their houses. Special concern is expressed over overloaded trucks transporting cargo to and from the PRC.
Appendix 9 49
41. Mitigation. A survey that includes baseline instrumental measurements of noise and vibration levels and a damage susceptibility study will be conducted, along with inspection of the present condition of houses, at the preconstruction stage. In case of excessive noise or vibration levels, remedial measures—such as special road surface design, noise barriers, planting trees, or anti-vibration layers—will be used along with monitoring.
2. Ecological Resources
a. Flora
42. Impact. No threatened or endangered plant species are located in the potentially affected ROW and no adverse impacts to such species are likely to occur as a result of the rehabilitation activities. Plant species present within the ROW are either introduced species or ubiquitous native species, which are highly tolerant of grazing, compaction, and other physical disturbances. Construction activities will affect only a narrow band of vegetation adjacent to the existing road. No substantial removal of trees or other vegetation is anticipated.
43. Mitigation. The Project will include roadside planting to ensure slope stabilization. Existing trees and roadside plants will be retained. Topsoil from borrow-pit areas will be saved and reused.
b. Fauna
44. Impact. Habitat fragmentation as well as accidents involving wildlife can occur as a result of blocking wildlife migration routes near the Dolon and Ak Beit passes. Construction camp workers and drivers can contribute to poaching or hunting wildlife.
45. Mitigation. Mitigation will include an extended study of wildlife migratory routes during the detailed design stage, and providing findings on the exact locations of routes and behavior of wildlife, together with recommendations on specific mitigation measures to the project implementation unit. Clauses should be written into construction contracts resulting in immediate dismissal and prosecution of individuals involved in poaching and wildlife hunting.
c. Ecosystems
46. Impact. The field assessment of ecosystems conducted within the frame of the IEE shows that, whereas no significant impacts are anticipated for mid-mountain steppe and meadow ecosystems as they have already experienced broad-scale changes as a result of overgrazing, mid-mountain floodplain and meadow ecosystems in the Karaunkur–Ottuk Gorge and sub-alpine ecosystems (Dolon and Ak Beit passes) are at a greater risk of degradation.
47. Mitigation. Mitigation measures to reduce risks posed to ecosystem health include siting of construction camps, asphalt plants, and other related facilities outside environmentally sensitive areas.
d. Protected Areas
48. Impact. No direct impacts to the Salkyn-Tor State National Park are anticipated. The Project could have an indirect impact on the national park by attracting more tourists. The potential impact is perceived as beneficial and within the environmental management capacities of the national park administration.
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3. Socioeconomic Resources
a. International Trade
49. Impact. The improvement of the road is anticipated to have positive impacts for international trade between the Kyrgyz Republic and the PRC and other countries by decreasing transportation costs and travel time. Modernization of the customs infrastructure and complementary measures from the Government to improve customs procedures—such as enforcement of overloading regulations, longer hours of operation, and introduction of one- window operation whereby all transactions are undertaken together—will facilitate border crossing and result in decreased transportation costs and travel time.
b. Industry, Agriculture, and Services
50. Impact. The improved road and modernization of customs facilities and procedures will enhance import and export opportunities for industries and facilitate connectivity and access of agricultural producers to Bishkek and Issyk-Kul oblast markets. It will have a positive impact on the construction materials industry. Agricultural producers will have better access to the markets of Bishkek and Issyk-Kul oblast.
51. Mitigation. To gain the most benefit from the Project, training on the development of roadside businesses should be organized for the local population, and microcredit programs launched as complementary projects.
c. Tourism
52. Impact. The improved road and modernized customs facilities and procedures will have a positive impact on tourism development. Tourists traveling from and to PRC will have more comfortable and faster travel, and local tourist attractions will be more accessible. The local population will benefit from increased activity such as hotel business, horse rental, handicraft trade, and entrance fees collected from tourists. Provided that the tourist season lasts only for 3–4 months, the potential of tourist attractions is still far from being fully exploited; even if increasing number of tourists visit the area, it can be concluded that no adverse impacts are anticipated in the foreseeable future.
53. Mitigation. To maximize the benefits of the Project, rehabilitation of the road corridor should be complemented with projects on the facilitation of border-crossing procedures for tourists, and development of ecotourism ventures. Tourist-oriented road signage should be introduced.
d. Transport Networks
54. Impact. Detours and traffic inconveniences will occur during construction. Following construction, the primary transport impact of the Project will be to improve the performance of the transport sector and greatly facilitate the flow of traffic, goods, and travelers.
55. Mitigation. Care will be taken during the construction period to ensure that traffic disruptions to road transport are minimized. Traffic management plans should be prepared.
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e. Health and Road Safety
56. Impact. Improvement of the road corridor will contribute to a safer journey and a reduction in the number of road accidents, and will facilitate access to advanced oblast and national health services. However, the improved road will increase vehicle operating speeds on the road and, if not controlled, accidents involving people and livestock may increase.
57. Mitigation. In Naryn, Karaunkur, Ottuk, Kara-Suu, and Kara-Bulung, provisions should be made for paved shoulders, road signage and speed limits, and service roads for local traffic.
f. Population and Communities
58. Impact. No adverse impacts on settlement patterns and communities are anticipated.
59. Mitigation. Opportunities for complementary actions to strengthen the community aspects of the project area are addressed by the social assessment. In summary, they include training for people (especially women) living along the road on new opportunities opened by the improved road such as roadside trade, tourist accommodation, and microcrediting of roadside businesses.
g. Cultural and Historical Heritage
60. Impact. No impacts to archaeological and historic resources are anticipated, with the exception of a graveyard (km 314) located close to the alignment that may be affected by vibration.
61. Mitigation. No mitigation related to known cultural resources is warranted. Contract provisions are recommended to ensure that construction works are suspended, local administration and state organizations on cultural heritage are informed, and all necessary measures to protect cultural resources are taken in the event of unexpected discoveries. The fencing of the graveyard located at km 314 should be strengthened.
E. Institutional Requirements and Environmental Management and Monitoring Plan
62. Legal and Institutional Framework. According to the Law on Environmental Expertise, any project activities should be preceded by preparation and submission of an assessment of environmental impacts (OVOS [Russian acronym]), and its approval by Ecological Expertise (State Environmental Review). The OVOS documentation should include endorsements from local administration; sanitary control bodies; Ministry of Agriculture, Water Resources and Processing Industry; and other organizations—depending on environmental attributes affected by the Project.
63. Institutional Requirements. The Investment Projects Implementation Department (IPID) will be responsible for ensuring that environmental procedures are incorporated in each stage of the work—such as document tender and contract preparation, bid reviews and awards, and supervision of preconstruction baseline monitoring—as an integral part of construction supervision.
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64. IPID will be responsible for overall contract administration and day-to-day project supervision, including environmental management. An environment and/or social officer will be appointed within IPID to be responsible for ensuring the environmental management plan, including monitoring requirements, are implemented effectively. The construction supervision consultant will assist IPID in its responsibilities, including instrumental environmental monitoring of the Project.
65. Environmental Monitoring Program. The environmental monitoring program includes routine site inspections and reporting related to soil and erosion control; embankment and erosion protection; borrow-pit restoration; noise, vibration, air, and water quality monitoring (including baseline and routine periodic water quality monitoring); and terrestrial and/or river ecosystem health monitoring. Specific monitoring provisions include the following:
(i) Water quality. Baseline and periodic water quality monitoring. This will be complemented with monitoring of water quality by macrozoobenthos (once a year for 2 years).
(ii) Air quality. Baseline and periodic air quality monitoring.
(iii) Noise. Baseline and periodic air quality monitoring.
(iv) Ecosystem degradation. Routine roadside ecosystem monitoring by indicator bird species.
(v) Land use-related impacts. Monitoring of quarry activities, siting of construction camps and related facilities, and siting of asphalt plants.
66. Environmental Management Plan. The summary plan is in Table A9.3.
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Table A9.3: Preliminary Environmental Management Plan Environmental Estimated Responsibility Mitigation Measures Location Time Frame Issue Cost ($) Implementation Supervision A. Construction Phase 1. Soil erosion • Preventive and Included in the Throughout the Construction Contractor PIU erosion control main civil section period measures to works cost minimize soil clearance, use of less erodible materials, and engineering measures 2. Natural • Installation of Included in the Rockfall – Construction Contractor, PIU hazards: rockfalls, rockfall retaining main civil Karaunkur– phase Design Institute. mudflows, and structures works cost Ottuk Gorge, Anti-avalanche avalanches • Installation of box upgrade to Department of culverts Kyzyl-Bel Pass; MOES. Ministry of • Artificial release of mudflow – Defense. avalanches with Karaunkur– artillery or Ottuk Gorge, explosives west end of At- • Warning signs Bashi Valley; avalanche – Karaunkur– Ottuk Gorge, Kyzyl-Bal and Ottuk passes 3. Air quality • Air quality control Control Construction Construction Contractor PIU deterioration measures and measures are sites, asphalt phase monitoring included in the plants main civil works cost; monitoring: 30,000 4. Water quality • Water quality control Control Construction Construction Contractor PIU measures and measures are sites period monitoring included in the main civil works cost; monitoring: 50,000 5. Ecosystems • Location of asphalt Included in the Exclude Dolon Construction Contractor PIU degradation plants, construction main civil Pass, camps, and other works cost Karaunkur– facilities outside Ottuk Gorge, Ak sensitive Beit Pass from ecosystems potential locations • Monitoring of 5,000 Dolon Pass, Post- Local ecosystem PIU sensitive Karaunkur– construction specialists ecosystems health Ottuk Gorge, Ak Beit Pass 6. Flora • Landscaping Included in the Throughout the Post- Contractor PIU (planting trees) main civil section construction works cost 7. Noise/vibration • Noise/vibration Mitigation Construction Construction Contractor PIU control mitigation measures are sites and period measures and included in the settlements monitoring main civil (Naryn town, works cost; Karaunkur,
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Environmental Estimated Responsibility Mitigation Measures Location Time Frame Issue Cost ($) Implementation Supervision noise/vibration Ottuk, Kara- monitoring: Suu, and 30,000 Karabulung) 8. Historical and • Halt of all - Project area Construction Contractor Local archaeological construction period administration, heritage activities and Academy of notification of the Sciences relevant authorities in case of historical and/or archaeological heritage being encountered during construction 9. Reinstatement • Topsoil strip (where Included in the Identified After Contractor PIU of borrow pits and necessary) and re- main civil quarries and completion quarries soil works cost borrow-pits of • Grassing the area along the road construction works
10. Construction • Proper construction 50,000 Contractor PIU camps camp management in compliance with health and safety plan 11. Road safety • Engineering to Activities In all sections Design, Contractor, local PIU reduce the likelihood ongoing construction, traffic police of accidents and • Education of users operation on the risks of high phases speeds • Enforcement of traffic laws C. Operation Phase 1. Monitoring of air • Ambient air quality Air quality – Air quality – Operation Kyrgyz Hydromet, KHM, quality, water monitoring station in 120,000; Naryn; period Sanitary and Department of quality, Naryn town, water water quality, water quality – Epidemiological Ecological noise/vibration quality monitoring of noise/vibration Karaunkur, Station Monitoring major rivers, – cost of Ottuk, Naryn, under SAEPF noise/vibration equipment is On-Archa, At- monitoring in Naryn included in Bashi; town and construction noise/vibration – settlements phase Naryn, Karaunkur, Ottuk, Kara- Suu, Karabulung 2. Habitat • Introduce crossing 5,000 Wildlife Operation MOTC in SAEPF fragmentation and channels and traffic migration routes period consultation with wildlife corridor signs SAEPF restriction KHM = Kyrgyz Agency on Hydrometeorology, MOES = Ministry of Emergency Situations, MOTC = Ministry of Transport and Communications, PIU = project implementation unit, SAEPF = State Agency for Environmental Protection and Forestry. Note: List of proposals and method statements to be required from the contractor for approval by the PIU: aggregate borrow-pits management plan; spill management plan; construction camp management plan; reinstatement and/or revegetation management plan, and traffic management plans. Source: Asian Development Bank estimates.
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F. Public Consultations
67. A number of public consultations with experts, local administrations, nongovernment organizations, and the public were held in May–June 2008. Informal consultations with the local population in Karaunkur, Ottuk, Kara-Suu, and Karabulung villages, and with representatives of nongovernment organizations were held in Bishkek. A stakeholder workshop for local administrations of Naryn and At-Bashi rayons was conducted on 16 June 2008. In addition, consultations with experts from the Ministry of Emergency Situations Ministry of Transport and Communications, and Academy of Sciences were held. The comments from previous large stakeholder workshops conducted in Naryn and Bishkek in 2006 were used to assess the actuality of the problem.
68. A summary of the opinions of the public consultations is as follows:
(i) The local population supports the upgrading of the road corridor provided that it will bring more socioeconomic benefits to the local population.
(ii) Feeder roads were proposed by locals to be included in the Project, specifically two roads connecting rayon center At-Bashi and EM-07, and the main street in Naryn that is a part of the road linking Ak-Talaa rayon and Tash-Bashat village.
(iii) Because of safety and noise/vibration issues, it was proposed that consideration be given to bypasses of Ottuk, Kara-Suu, and Karabulung villages.
(iv) Noise and vibration issues were the major concern in Ottuk, Kara-Suu, and Karabulung villages and Naryn town. The recent letter from the people of Ottuk to MOTC repeatedly raised these issues.
(v) Local people should be involved in the road construction.
G. Findings and Recommendations
69. The findings of the IEE are as follows:
(i) Construction activities under the Project will be largely of a rehabilitation nature within the previously disturbed road corridor and no significant environmental impacts are anticipated.
(ii) The study of ecosystems health conducted in the frame of this IEE showed that there are ecosystems in the project area that are more sensitive to environmental impacts—specifically, mid-mountain floodplain and meadow ecosystems located in the Karaunkur–Ottuk gorge, and subalpine ecosystems (Dolon and Ak Beit passes).
(iii) According to the local people from Karaunkur, Ottuk, Kara-Suu, and Karabulung villages living in proximity to the road, noise and vibration have an impact on their houses. However, visual examination showed that the houses are located outside the ROW, and the major problem is probably related to overloaded trucks and their noncompliance with the 30 km per hour speed limit.
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(iv) The examination of baseline water quality in rivers of the project area by chemical analysis and a bio-indicators survey undertaken within the frame of the IEE showed that water quality is good.
70. The following recommendations are proposed based on the findings of the IEE:
(i) Environmental provisions in contract. Specific environmental provisions are recommended for inclusion in contract documents, including provisions related but not limited to (a) erosion control and air and water quality control; (b) location of asphalt plants, construction camps, and other facilities (not in environmentally sensitive areas indicated above); (c) borrow-pit restoration; (d) quarry operations; (e) safety provisions; (f) baseline and routine monitoring of air quality, water quality, noise, and ecosystem health; and (g) community relations.
(ii) Environmental monitoring. Baseline noise, vibration, and air quality monitoring is recommended at the preconstruction stage in settlements along the road.
(iii) Capacity building for environmental management. A training program for selected staff, and addressed to the goals and techniques of environmental management activities in road projects, is recommended.
(iv) Recommended complementary projects. A training program to ensure that local businesses and populations will be able to use all the benefits provided by being adjacent to the international road corridor is recommended. A complementary project to increase the attractiveness of the Salkyn-Tor State National Park for ecotourists is recommended.
H. Conclusions
71. The Project will have significant social benefits and, if the prescribed mitigation and management measures are fully implemented, the Project is unlikely to have major adverse environmental impacts. An environmental monitoring plan has been prepared and responsibilities for implementation assigned. A budget has been allocated for environmental management and monitoring. A full environmental impact assessment under ADB guidelines is not required.